Components Of A Robust Business Plan
What is the business?
Often a key factor in maintaining a focus on your goals is to understand exactly what your business is. Describe your business as briefly as you can, and take note to include how your particular skills will help the business succeed. Brevity is important as it demonstrates you have a complete grasp of the core elements of the business. In this case, less is more.
Products and Services
Document the services (and/or products) that you will be providing. If there is anything distinctive or unique then make a note of this as well. You will want to be able to analyse and develop your product, so spend some time investigating any competitors to help understand whether your service will be superior or competitive on price.
Speaking of pricing, remember that as a new business you should really focus on delivering on the best quality of service. More often than not, new businesses place a reliance on price, and can find themselves caught in a trap especially if they undersell themselves. Focus on the quality first and foremost.
Where is your market?
Describe the market you will be providing for, and carry out some research to see where any similar entities or competitors may have positioned themselves. Many companies and individuals provide an enormous amount of intellectual goodwill about their business across the public domain, so do not hesitate in exploiting this fact. Targeted research will help you to gain a thorough understanding of the market, and potentially highlight any gaps in the market that you may be able to take advantage of.
Who are your professional partners?
If you provide a product you may need a wholesaler to distribute your goods. Or you may need an Agent to help promote you & drive you forward. Perhaps you have a media lawyer to deal with your contractual matters.
Detail who these partners are, and highlight the function they provide.
What assets will you need to commence business?
Make a list of all the equipment you will need to start your business. This could be some simple items such as a desk or a personal computer, or it could be something more elaborate like an expensive array of video camera equipment. You may already own such items yourself, or you may need to purchase them, but regardless of this fact you should document them.
You may also own some intellectual property relating to a body of work you have created, or are in the process of finishing. An example of this could be some right to copyright royalties. Document as much information relating to this as possible. It will help in later discussions with your accountant, and the more information you can provide the more effective your accountant will be at valuing this, and dealing with any potential taxation liabilities.
Prepare a simple cash flow forecast
Produce a brief summary of what you need to spend to get your business started, including the investment in any equipment you will need. Once you’ve quantified the start up costs, extend the cash flow for a few months and record the regular running costs such as utilities, travelling expenses, or any one off marketing or professional fees. Don’t forget to include your own living costs in the cash flow forecast.
Make a note of any income you expect the business to generate over this period; you may already have a contract in place or an agreed opportunity coming to fruition. Without exception you should attempt to be as realistic and accurate as possible.
Do you need any financing?
Consider the amount of financing you will need to get the business started. This should become clearer after undertaking the cash flow exercise, in which you will have detailed any equipment you need to invest in, or what funds you require to operate the business before any income comes in. You may be able to fund these fledgling months yourself, or perhaps through a friend or family member who are prepared to support you. If this is not the case, then a bank overdraft is a good short term financing option. Larger projects may need more institutional financing, but whatever the level of financing you require, having an accurate and realistic cash flow forecast will be a necessity in helping to secure investment.
Where do you want to go?
Last, but certainly not least, is to provide an insight into where you see the business developing over a period of time. This is your ultimate goal and, depending on the nature of your business, it could be an achievement plan over one year, two years or even five years and longer. However long it takes is not as important as knowing exactly where you want to be.
This goal will undoubtedly evolve as your business grows and develops, and given the importance in business planning & strategy, we will be devoting more time to the pursuit of goals in later articles. For now, however, be bold – set a target and give yourself a goal.
Business Plan Checklist
Make sure your business plan includes:
- Nature of business
- Target Market
- Key Competitors
- Any Assets
- Simple cash flow forecast or Profit and Loss forecast for first 9 – 12 months
- Financing requirements
- Goals and aspirations – Short term, medium term and long term