Are you one of the many people who always talk of starting a business but never actually get it off the ground? Are you one of the many people stuck in the 9 – 5 routine and fed-up? In business, we have a saying, “Business success is not measured by the entrepreneur’s ability to dream up a winning strategy but by his/her ability to deliver the strategy.” The same principle applies here. Don’t just think, convert your idea into something concrete – your very own business and be your own BOSS!
Starting your business is the easy part. Ensuring the business is a success is the hard part. The Four Key Steps every entrepreneur must not ignore when starting up are:
What is it that you wish to achieve? How would you ideally like to achieve this? It is vital to brainstorm and dump everything that comes to mind on paper. It is through this visualisation process that a clear direction for your business will emerge. In this stage, no idea should be discarded as it has still to go through the qualification stage. Once all ideas have been jotted down, they should be classified under headings of Targets, Objectives, Finance, and Boundaries – (this is the qualification of ideas). If some of your ideas do not fit under these classifications, then chances are those ideas will not work for this business at the current ‘start-up’ stage. Don’t discard those ‘extras’, but keep them safely tucked away to revisit during your growth years. Best way is to create a ‘Mind Map’.
During this stage entrepreneurs should thoroughly explore qualified ideas. Sadly, often entrepreneurs ignore this stage before starting their business until much later, if at all. Researching not only your ideas but also researching your market, competition, finance options, banks, suppliers, local networking groups will set the scene for the business’ success or failure. Do your homework well.
Creating Impressive First Impressions
First impressions are lasting impressions as we categorise others in 150 milliseconds and form lasting judgements within 30 minutes. As such, 55% of your appearance and body language counts towards creating your first impression, voice and attitude 38%, and the content 7%. For a business, the first impression is not only created by your brand image, but also by your attitude towards customer service, your interaction through social media, what your existing customers say about you. A mediocre first impression can be overcome but it leaves you at a disadvantage & requires greater effort to rescue. A well thought out business plan is just the beginning in setting an impressive first impression.
Having thoroughly researched and fine-tuned your ideas, it is important to create your ‘living and breathing’ plan. A Business Plan is not just for when the business is being set-up, but rather for as long as the business exists. Many entrepreneurs say they don’t have time to keep the plan updated because they are busy working in the business. Frankly, there is no excuse to not keep updating the plan to mark milestones achieved, outstanding, and milestones that may have been audacious. The business is yours and so should its plan be. (The Marketing plan of a business will determine how successful the business is in attracting clientele and is often missed out completely.)
The Business Plan is a manual that will assist you in navigating your way through various stages of business development. As such, the Business Plan is a blueprint of your ‘initial’ vision and a powerful tool to continually analyse your business model, to test ideas and feasibility of those ideas, whilst simultaneously assisting in making informed decisions.
Unfortunately, as is often the case, Business Plans seem to only be written upon request from a potential investor or by a Bank. It is worthwhile noting that a well written and researched plan usually makes the difference between a successful business and one that may struggle to survive. I can hear you ask, “Why – after all I know what to do and know how I will achieve it. It’s all in my head”. That may be so, but a business plan helps you define the “ideas in your head” into realistic and viable opportunities and focus on potential strengths, weaknesses, opportunities, and threats. Your comprehensive plan will not only help to forecast regular growth but will assist in securing investment from business angel investors or loans from Banks, if required. Investors refer to business plans during the ‘Due Diligence’ phase of investing and typically businesses with quality plans secure the investment required. Remember Business Plans are about quality and substance rather than quantity (of pages).
Look at your start-up venture as a car. Let’s say that as you’ve never launched your own business before, you’ve also never driven a car before. You have, however, just taken some classes and passed your driving test. As a beginner, you may have to refer to your car’s manual to ensure you are aware of its functions. Similarly, your start-up venture is your car and your business plan is its manual.
So, what should your manual for business contain? Well, a quality, effective business plan will at the very least have the following sections:
- Executive Summary – No more than three pages; should summarize the plan and provide an interesting overview to keep stakeholders/funders interested in reading further. The Executive Summary must only be prepared upon completion of the business plan to ensure incorporation of all key points.
- Introduction / Background of the Business – WHO, WHAT, WHY? Who started the business? What is the core activity of the business? Why was the business started?
- The Market Opportunity - What gap is this activity addressing? What market research has been conducted in support of your endeavours?
- The Product/Service - What is this activity? Elaborate in significant comprehensive detail the product or services core benefits – then describe its ‘features’ if any. If a product, include any images and information on whether a prototype is ready.
- The Competition – Know your competition – who are they, what do they do, how do they do it? What are you doing differently? What barriers to entry exist obstructing competitors from offering the same/product or service - ie lead times, intellectual property, etc.
- Sales & Marketing (Target Market, Marketing Plan, Sales) – Who is your Product / Service for? What is the demographic and geographical location of your Target Market? What route to market will be taken and how will sales be achieved. Remember, sales are how the business makes money, and marketing is how the consumer becomes aware of the product or service. They are not the same!
- Operations (Sources of supply, Operation Plan) – information relating to the internal day to day operations and logistics of a For business supplying products, will they be imported? Who are the suppliers? Will there be any storage requirements? For service led businesses, will there be strategic partners in place who will supply services you may wish to outsource.
- The Management Team – Who is behind the business? Whether it be an individual or a team, it is important to be able to illustrate the skills and experience of those behind the business to ensure its success. This section should also include strengths and weaknesses (i.e. missing skill sets) within the team and to create credibility for the business.
- Financials – Financial forecasts (cash flow and profit & loss) must be as realistic as possible. Your financials should ideally contain a best and worst-case scenario to address any volatility in the local and global economy that has a direct impact on the business.
- Risks and Mitigating factors – Mention any risks to your business, (internal or external to your business) and how these risks will be addressed to ensure smooth business continuity.
- Appendices - Any images, tables, research, reference items.
Compiling a business plan is a time-consuming task and often in the zeal of starting a business, entrepreneurs either ignore to put one together or usually ask an external source to write one. Neither option is ideal. A blindly run business is doomed to fail and one where entrepreneurs have not been involved during the Business Plan compilation process, will have a rocky road to raising finance. “Know your Business Plan inside out – success of your business relies on you.”