In today’s digital world, launching a business can be as easy as logging onto a domain hosting site, choosing a name, buying a domain, registering your chosen name with your country's legal system, waiting a few days to get the certificate of registration, and then before you’ve even stopped to take a breath, you are now a business owner fueled by adrenaline rushing straight out the door to find your clients, dreaming of being the next Bill Gates.
However, when starting a business for the first time, a concise, carefully crafted business plan or even an executive summary might give you and your new business the greatest chance of enjoying long term success for years to come, ensuring you are prepared to get as much right as possible from the very start.
With just the words “business plan” conjuring images of leather bound, thick documents it can be easy to not know what it should include, or what the key elements are. Below, we’ve listed some of the most crucial steps that your business plan should outline, which can give you and your business direction, focus and achievable goal markers to head toward.
1. Craft a supreme executive summary.
Think of the executive summary like an elevator pitch. It needs to be concise, succinct, and easy to remember whilst also summarising the goal and mission of your business in just a few sentences.
A well thought out executive summary will not only catch and hold potential customers' attention; it can also keep you grounded by describing your company and the product or service it will sell. This can be a good way point to anchor back to when first starting out, as sometimes it can become easy to get waylaid and forget your original mission statement when trying to attract as much business as possible.
Remember too that when it comes to prospective investors, the executive summary is likely to be the only part of the plan they will read, so try to avoid writing the summary as an outline, a list of elements, or as a table of contents. Most investors will base their initial decision on whether to read further based on the executive summary, so make it well written, and avoidant of any hyperbole or false promise.
2. Do your research, then include it.
Remember back at school when you would write an essay and then have to provide references and sources for it? That rule was taught for a reason: Because the same principle applies to any documentation.
Including market research in your business plan justifies consumer demand and validates the need for your company. It supports your initial ideas of how well your niche market is doing and determines the chances you will have of establishing yourself as a unique brand to your target audience. It’s useful too as a good way to measure the demand and capacity for whatever it is that your business will specialise in.
The best types of market research often evaluate their target market. Include and analyse information such as your target market’s:
● Demographics: Examples include their age, gender and social status.
● Location: Where they live or work, cities, towns, or even countries.
● Profession: Your business might be especially targeted toward lawyers or teachers, or perhaps it will only appeal to those involved with a certain type of profession, like dentistry.
● Groups: People with shared hobbies, interests or habits.
Make sure to also include field research. This research could contain interviews with existing customers, potential suppliers and competitors, and industry experts. Realistic insight to support your hypotheses will be another key motivator in swaying potential investors down the line.
3. Make note of your competition.
Unless you are entering into a precisely niche industry, you will have competition. To suss out these competitors, undertake searches of what it is your business will potentially be offering or supplying.
A good rule of thumb for anybody searching for competitors, whether known or not is to start with a major search engine like Google, and then expand outwards. Search as you would a consumer, include search terms or phrases that are unique to your industry especially, or preface searches with queries like, “Where can I buy”.
If your business will be to manufacture or produce something, use seller sites like Amazon, eBay and Esty and approach those from the eyes of the consumer. Make note of who is established, and what they are offering.
In your business plan, just like with the market research: Be thorough, and list all existing and possibly potential competitors. Include things like:
● Who your direct competitors are, and whether they’re selling the same products and services as you.
● Who your indirect competitors are, and whether their growing market overlaps yours.
● What could prevent other companies from competing with you, and what their potential barriers to entry are.
● What your USP, or unique selling proposition, is. Put simply, what makes you different from your competitors? What will have consumers choosing you over the competition you’ve just listed?
The last point should be an important focus of your entire business plan. Explaining how your business will differentiate itself from all the others, or what new offering it brings to the table that will have consumers curious enough to come flocking keeps your business focused and entices any investment down the road. Your USP could be as simple as price, service, quality, or value. Just make sure it’s clear and obvious.
4. Build your brand and showcase its marketing, early.
What differentiates Nike from any other shoe seller is its brand. Behind every successful business is a loyal community who have invested in some appealing, unique element of the business: Whether it’s their storytelling, products, background or simply the personality they embody that consumers can relate to.
Branding isn’t just limited to a fancy graphical logo however. To stand out from the competition we just talked about, your business must develop a personality, tone, style, and characteristic that draws customers to your products or services. Whilst visual themes and logos are important for making your business easy to identify, your consumers will resonate more with a voice and any business values than they will a colour scheme.
To build that brand, you need two things: A website, and an encompassing, detailed marketing plan.
Your company website is the most important front-facing component of your business, and it is the area that generates the most free advertising. Make sure it’s designed well, with easy navigation, and the information on it is digestible. Include your USP, and begin to develop a brand tone and style in your copy-writing.
Once this initial space is created online, you will need to outline a full marketing strategy that showcases how your online presence will continue your marketing efforts into the future, and what benefits this will have on advertising your business.
In your marketing plan, include:
● Pricing: How will you price your end product differently to your competitors?
● Positioning: Where do your products or services fit into the market?
● Promotion: What channels will you be utilising to attract and engage with customers?
● Profit: How much do you expect to make per item sold?
● Place: What will be your sales outlets?
Initially, it will be most important to consider what channels are necessary to start on. Your budget will be tight, so you will need to plot a cost-effective strategy. Channels such as SEO, or Paid Social Advertising (PPC) can get your business in front of potential customers, but could be overwhelming and costly for someone with no knowledge or expertise in the areas.
If that’s the case: Do your research. You’re likely to have better results working with a marketing agency specialising in small businesses to begin to get you ahead of the game early.
5. Forecast your financial plan.
Last, but not least, is the most important plan of all: Your financial one. In any business plan, investors or readers want to see a well thought out financial plan that includes profit and loss, and mitigates any unforeseen external financial circumstances should they arise, such as a tax investigation or loss of income.
Your financial plan should have a view to forecasting your cash flow and sales forecast, whilst identifying any expenditures needed to keep your company on growing and flourishing ahead of competitors, and any profit or loss forecasts.
In your financial plan make sure you include:
● Your business costs to buy and sell products.
● Your businesses costs for labour and manufacture, including any raw materials.
● Any staff costs, especially if you are a service orientated business.
● Any distribution and marketing costs.
● Your fixed and variable overheads.
● The cost of any accounting software, or accountancy or bookkeeping services.
As well as forecasting, a good financial plan should also make note of the hours put aside that will need to be dedicated to dealing with other financial aspects of the business, such as filing and submitting tax returns, making up and submitting accounts, and keeping records for the books.
Just like with marketing, this can be overwhelming for someone with no prior experience of accounting or financial records, and in which case it may be wise to budget for the help of an accountancy firm that specialises in helping assist small businesses with their books or accounts.
Whilst business planning is not easy, following these critical steps and including their components in your business plan will ensure your business has the best chance of enticing funding propositions and of course, enjoys success in the future.