1st March, 2021
You’ve decided to start a business. That’s great! But what’s next?
A business plan is a good place to start.
A business plan will help you craft a vision and direction for your business, as well as help you secure funding from potential lenders or investors.
A business plan doesn’t necessarily have to be too detailed or involved, but it does need to be thoughtfully considered to give you the best chance of success.
A business plan is a document that a business owner writes to set out the business’s objectives and how it plans to achieve them. It covers things like how the business will market its product or services, its financial position and how it will operate.
Business plans are especially useful for new businesses, but every business can benefit from a business plan. It should be reviewed and revised periodically to assess how the business is tracking.
Business plans are used for both an internal and an external audience.
From the internal perspective, they help the business owner and leadership team get aligned on business objectives and agree on how those objectives will be achieved. Writing a business plan makes allocating budget and resources clearer, and helps the team understand the roadmap and their role on the business journey.
A business plan can also be used to help those outside the business understand its plans. For example, a business plan might be used to help investors feel assured enough to provide funding.
There are as many ways to write a business plan as there are types of businesses – no two are the same. An uncomplicated business might set out its objectives and planning in a page or two, while a complex enterprise might take dozens of pages. But while their format and length vary greatly, they should all have similar elements.
Essentially, the business plan needs to answer a number of questions about your business. Below are some of the key questions that a business plan needs to address.
Businesses exist to solve problems for people, so your first step should be to define the problem you are solving. The simpler, the better. Think about the specific need that you’re trying to fulfill.
What is the product or service you’re offering and how is it going to solve the problem?
Keep in mind that businesses solve problems for people. So, who are they exactly?
Who will want or need your product or service? What will motivate them to buy it? This is where market research comes in.
Chances are, there’s already someone selling a product or service that’s similar to your own. Figure out who they are and what they’re doing.
That will help you find your competitive advantage – that is, why your customers will want to buy from you instead of from someone else.
The idea of going into business is to make some money, right? That’s hard to do if you’re spending more than you make.
Before emptying your pockets, estimate how much it’s going to cost to get your business going.
The best financial plans cover the following three areas, as well as how these projections will change over three years.
Setting up a business costs a lot, from costs of developing your product and buying the tools you’ll need to start servicing clients, to the initial outlays of licences, permits and insurances.
Figure out your cost per unit/service, plus consider your initial outlays to get the business going.
Startup costs will vary from business to business. To get a better idea of how much money you might need to start your business, consult this handy list of costs that you might encounter as a business owner. You can also consider hiring an accountant or bookkeeper to help you figure these out.
It’s also important to consider commonly overlooked business costs.
Once you’re up and running, you’ll find you have many ongoing costs. From cost of staff to rent, consider what costs will stick around for the long haul.
The critical part: calculating how much money your business can make. Consider your revenue per unit/service sold and how this will increase as your business scales and evolves over the years.
How are people going to access your offering?
Whether it’s through a website, on a digital marketplace (like Etsy or eBay) or a physical store front, figure out when, where and how you’re going to sell your products or services. Each option has pros, cons and different costs.
READ NEXT: Funding a new business