When you first think of your business idea, it can be so easy to launch directly into the creative side, building it up without the forethought of how what you do now may impact other facets in the future. It’s important to have a solid foundation under your bouncy castle and this is where the business plan comes in.
It may seem like the boring part of the business, planning for the future, planning to expand, planning to leave and sell before you’ve even begun but not only does having a plan help you to work out your roadmarkers and ensure you’re on track but also is an enormous help when you get approached to franchise your business (which in some case happens way before you ever expected it to – IF you ever expected it to at that!) and with a plan, you’re not scrambling to prepare or getting caught up in a hype that may not work in with your vision for the business.
The good news is that it doesn’t need to be difficult or laborious.
First things first – what do you do? why do you do it? what would someone reading this document need to know to understand your business’ purpose?
Are you a Limited Liability Company? Are you a sole proprietor? A partnership? Where are you located? Are you an e-Commerce business or brick and mortar – perhaps a hybrid?
It may seem overwhelming at the start but these are the basic stats of your business. It’s like filling out any application form you’ve ever filled in, but for your business rather than for you personally.
2. Products and Services
Write up a list of your products or services and write a brief description of each one. It may help to categorise your products or services, especially if your company is focusing on becoming a lifestyle brand with its fingers in many pies at once.
What will you offer immediately and what do you plan to grow into? What will you offer say 5, 10 years from now?
3. Sales and Marketing Plan
Describe how you intend to structure pricing for the aforementioned products and services. What’s your justification for arriving at that price? – does your research support it? – what are the elements that make it up? ie cost price, labour, packaging, shipping, margin? etc these should all be very transparent and itemised.
4. Market Analysis and Marketing Strategy
Who are your target market? Where do they live? work? What are their hobbies? What else are they interested in besides your burgeoning business?
In order to market accurately and efficiently to these people, you need to have an understanding of who they are and what their buying behaviour may be.
5. Competitive Analysis
Who are your competitors? What do they offer that you don’t? What do you offer that they don’t? – it’s not enough to compete with the same product or service, you need to offer something extra or different in order to stand out from the flock.
Identify what your competitors do well and the areas for improvement (just don’t tell them those improvements!)
6. Financial Plan/Budget
And finally, your financial plan. Here’s the part where you need to either be a huge optimist and overforecast your profits or be miserly and underestimate your ability. It goes against everything we tell you in our motivators but this is the one area where you need to be wholly realistic. If you state that you’re going to gain 10 clients a month at an average of $5,000 each and you only make one client every 3 months for a discounted price of $2,500, the financial plan and your company’s growth becomes entirely redundant.
You need to state your factual finances as they are at present. Your forecast is what you can realistically pull in if you set your mind to it including all the outgoings you may not have thought of like salaries, professional fees, stationery, premises, power, water, insurance, provisional tax (another reason not to grossly overestimate (or grossly underestimate)).
- What is the figure you need for start-up capital?
- What is the figure you need to operate?
- Will you buy stock up front or ad hoc?
Even if you’re like one of the huge companies that is making massive waves without any assets ie Uber which owns no cars, Alibaba which owns no stock, Airbnb which owns no property or Facebook which creates no content, you’re still going to have to find seed money, you’re just a little luckier in that you’re not having to front up costs for inventory as well.
While the whole things may sound a little overwhelming and intimidating, it can be truly exhilarating, especially once you start implementing it and seeing results. It’s so motivating when you’re working within your business and you can see how each step you take, each element you implement, affects the overall company strategy. It’s truly transparent and exciting to see progress where before you’d been so engulfed in the mere labour to get everything up and running.
Remember, if you have questions, or you’re launching a start-up and need some guidance, drop us a line – we’re always here to help!