Here are some questions to ask yourself when starting a business…
– What will the business do?
– Where will it operate?
– Will I need premises?
– Do I need people to make it happen?
– Can I do it on my own?
– Can I fund the business myself, or do I need financial support?
– How long will it take to get the business into profit?
– What relevant experience or support do I need?
– Have I got what it takes to make it work?
The most important thing to remember about starting a business is ‘determination’. Seeing it through, even through the tough times. All of the top leaders in business have succeeded because of a determination to make it work.
I really enjoyed this one, Ron Finklestein discusses how to create a profitable business and how to avoid some of the common mistakes:
Friday: using Ning to create your own social network…
Management and personnel – detail the proposed or existing management team structure and list management members’ expertise. Outline any areas of weakness that could be improved, plus how they might be improved.
Operations – describe assets and premises that you have or intend to purchase.
What machinery, equipment or premises will you need to buy or do you own?
Will computers/IT be used within the business and how?
What communication, customer services and operations procedures and processes will you put in place?
Financial performance – include your financial forecasts and estimates of what you will be likely to pay out and receive for the first year.
List direct costs and outgoings as you see them.
Figure out cashflow by reviewing dates your payments will come out and ensuring that enough money will be coming in to the business to cover them.
If using the business plan to raise finance, use these figures to predict what cash you are likely to need (adding up to 20 per cent contingency to any funding requirement outlined in your forecasting).
Explain why the money is needed. Are you funding start-up? Are you funding growth? Acquiring new customers? How so?
SWOT analysis – create a one-page analysis of the strengths, weaknesses, opportunities and threats for your business. Your market research will help. Outline briefly what you intend to do to make the most of your strengths and opportunities, and how you intend to smooth out creases and deal with threats.
> Strengths: you may have a great name, idea or niche product.
> Weaknesses: however, you might foresee low profit margins initially, problems recruiting decent staff or may rely on a few customers for the bulk of your sales.
> Opportunities: your biggest competitor may have gone out of business or you may have seen the chance to target a new and growing market.
> Threats: your biggest competitor may have grown or is now offering a unique service or product that you are unable to offer. A new competitor or economic pressure could also threaten your business start-up.
Future Goals for your business and what you want to achieve. Then create objectives, tasks and actions. Refer back to your written goals.
How do you intend to grow your business and achieve your targeted market share?
Where do you want the business to be in one year, three years and five years?
List what you want to achieve and by when. Note who will carry out the action or task to make this happen. Explain how you intend to reach these targets and exactly what needs to be done in order to do so.
Further Information – Include an appendix to add more detailed information, such as market research, company or product literature. You might also include more detailed financial forecasts in the appendix, along with CVs of key team members, target customer details or anything else that will add credibility to the business plan.
Have you revealed the answers to these questions in your business plan:
How will I get from where I am now to where I want to be?
How will my business operate?
What do I need to do and what finance am I likely to require?
Where do I go from here?
Last time we looked at the Executive Summary and how it is a summary of the key points of your business plan. However, even though the Executive Summary will be at the start of your business plan, it will only be written at the end, so you will need to research and explain the other sections well. They can be as follows:
Business and Products
What will make the business unique or different?
How will it be differentiated from other similar products or services?
What are the benefits you will offer to customers?
Will you save them time or money, make their life easier or safer?
Are there any disadvantages or problems?
How are you planning to develop and grow the business?
The Market and Competition – explaining which markets you will sell in and segment the market into groups that you will compete in.
What is the size of each market segment and your intended share of it?
Are there any noticeable market trends, changes in tastes or growing market areas?
How might these affect your business?
What drives the market?
Are there any growth forecasts for the market segments in which you operate?
What contribution to profit do you think each part of your business will make to the overall business?
Give details about the primary competition. What do and don’t they offer?
Are there any windows of opportunity?
Who supplies, distributes or partners them?
Who are their biggest customers?
How does their product or service compare to yours?
What are the key differences and how do they market their business? (Use your competitive intelligence report notes about your competition from your fact-finding mission).
Marketing and Sales – outline how you intend to reach your target markets and give details of price, product and positioning.
Where will your product or service be positioned in the marketplace – as a high quality item with a high price, or as a budget item or service?
Is there high demand?
How will you price your service/products?
What are the unique selling points of your product or service and which of these are of primary importance to your customer?
Who will be the end user?
How will you reach the end user and promote your business?
What selling methods will you be using: face to face, telesales, website sales.?
Do you think your idea has a great angle that might get you some good PR – some local or national TV, press or radio coverage?
Would the idea translate well to the internet for online selling, or would it sell best at exhibitions and events, or over the counter?
Next time: Managment and Personnel, Operations, Financial Performance, SWOT analysis and Other
Even though the Executive Summary is written at the end of the Business Plan, it is normally inserted into the beginning of the plan. Some investors with only look at this part of the plan, so it is important that you include all of the relevant, important information about your business in the summary. The executive summary summarizes the key points of the business plan. It should define the decision to be made and the reasons for approval. The specific content will be highly dependent on the core purpose and target audience. To get a sense of the difference the purpose and target audience can make, here are three different sets of key points for an executive summary – one for a loan request, one for a start-up seeking venture finance, and one for an internal plan. Items unique to a particular kind of plan are highlighted in bold:
A loan request executive summary might contain the following information:
- Company information: name of company, years in business, legal structure, minority and majority owners
- Brief description of project
- Amount and length of loan
- Objective reasons why the bank should be confident that the loan will be paid back. This likely will include
- Financial track record
- The future revenue stream
- Any contracts in place that might guarantee the revenue stream is more than just a forecast.
For a new venture, the executive summary might contain:
- Company information: name of company, proposed legal structure, current legal structure, minority and majority investors.
- Amount of investment requested
- Expected terminal value
- Description of market opportunity
- Objective reasons why the market opportunity can be exploited by this particular team
For an internal project plan, the executive summary might look like this:
- Company information: not applicable
- Description of project
- Project mandate: who requested the proposal, who is being assigned to carry it out
- Strategic, tactical and financial justifications
- Summary of resources needed: staff, funds, facilities
In some cases the business plan as a whole contains similar information, but for one type of plan it is mere detail and for another it is a key decision making factor. For instance, both start-ups and internal projects need staff and facilities. However the staffing and facilities needs are considered details in a plan for start-up financing. In a plan for internal projects they are key elements and, in fact, may be the only resources needed.
Step 3 is a description of the rest of the business plan.
Hello Small Business Owners,
I would like to start this blog from the beginning of where a business will be, and generally speaking, new businesses start with a business plan. This can be a formal business plan where you will be structuring it for potential investors, employees or co-directors, and it can be informal where it’s more a basic structure and guidance for yourself and your business goals. ( If you would like to see what can be considered even before doing a business plan, click here)
I am going to outline a basic business plan structure and you can take from it what is relevant to you.
Business Plan Overview:
Though business plans have many different presentation formats, business plans typically cover five major content areas:
– Background information
– A marketing plan
– An operational plan
– A financial plan
– A discussion of the decision making criteria that should be used to approve the plan
– An executive summary
Some of these content areas may be more or less important depending on the kind of business plan. There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience. A business plan should contain whatever information is needed to decide whether or not to pursue a goal.
Once a business plan has been developed, the key decision making points are usually summarized in an executive summary.
Start thinking about it now and we’ll go into each area in depth next time!