How to research your idea and write a business plan
If you're serious about starting up you'll need map out your intentions in a business plan
If there's one thing life teaches us, it's that you can never plan for everything. But that doesn't mean you shouldn't try. Having a well researched and logical business plan will not only get your venture off the ground but keep it on track when it is up and running.
The importance of a good business plan
In the first instance, unless you have a strong plan, you'll be unlikely to secure any funds and your idea will fall at the first hurdle. Your plan will serve as a structured form of communication to your investors, whether it be Business Link, the banks or even family and friends and it will provide reassurance as well as a means for everyone, yourself included, to measure your business' performance.
This aside it can assist you in a number of other ways. Firstly, writing a business plan will help you to prioritise what exactly needs to be achieved and by when. Do you need to find premises for your business before you hire staff? Should you be talking to wholesalers before your product has been finished? The answers will be different for each business but it certainly helps if the are clear in your mind.
“If objectives are clearly flagged up then they are more likely to be achieved,” says Tim Berry, president of business planning software company Palo Alto.
Of course, by using your business plan to prioritise key tasks, it will also help highlight how to plan your cash flow. It's vital to establish just how much you intend to spend and when. Whether it's to buy stock, order uniforms, lease equipment or whatever, unless your finances match your requirements at the right moment, your business could stall.
Getting your plan together
It ought to be clear by now that compiling a business plan should be at the top of your ‘to do' list. If you're in a partnership or part of a potential management team then establish early on who's job it is to write one and then the same individual should be assigned the task of making the business stick to it. How far ahead to plan will again come down to your own aims and the type of business, but a year, broken down month-by-month, will be a minimum.
Once you've established responsibility and a timeframe, you will then need to come up with a number of key criteria on which your business' success will be determined and how these can be achieved. It could be achieving a given number of sales by a set date through an aggressive marketing campaign, or expanding to three more product lines through extensive market research.
Whatever these achievement criteria turn out to be, you need to think long and hard about them without making too many assumptions. Think about your business failing in two or three years' time and try and imagine the reasons it might have done so.
What to include
On a basic level the plan should at the very least give a description of what your company will sell or the service it will offer, the buyers you will be selling to and just how you'll be filling a gap in the market by touching on pricing and existing competition.
For your own benefit, as well as others, it must contain details about how exactly you intend meeting your key objectives as well as sales forecasts, target dates and who, apart from yourself, is to be responsible for this.
Then comes the boring, but just as necessary part. Include a financial analysis which shows clearly where your sources of a finance will be coming from (be honest) a profit and loss forecast, cash flow and balance sheet projections.
The key to all this will be striking a balance between covering your business in enough detail, while at the same time keeping the plan, clear and concise enough for it to be useful. The most successful business plans will be the ones you refer to time and time again, and not just sit on a shelf gathering dust once you've begun trading.
It's vital to establish just how much you intend to spend and when.