If you’re looking for funding to start your business, one of the first things you need is a business plan. Sage Business Expert Jacky Tustain gives her advice on what you’ll need to consider for your plan and why.
When starting a business I always advise people to write a business plan. Why? The process of creating a plan ensures you work through what you are trying to achieve, it validates your business idea, and allows you to see where you are going and how you intend to get there. It is never just because your bank manager or potential source of finance will want to see one.
The nitty gritty
Your plan must be clear about what your business idea is and how it will make money. You need to research your market (are there people ready to part with their money to buy your products or services) and how you will get your goods or service to market (from advertising to delivery and after sales). After all costs and potential sales volumes are considered, will the business make any profit?
Other aspects included in a good business plan will be the dotting of Is and crossing of Ts – making sure you have considered any legal process or requirements for example.
Efficiency and quality are very important in business. If you are to stand a chance of surviving, even in the short term, then paying attention to how you will run your business to be both competitive and to minimise waste, before you start, will save extra work later on.
We can all get caught up in our business dream. To be sure you have a good understanding of what you are considering perform a SWOT analysis of your idea. Consider the Strengths and Weaknesses of your business as well as what other Opportunities this can open up (future potential) and any Threats (risks, competition) that are out there. This also shows prospective financiers that you have thought through your venture properly.
Tom, Dick and Mary
Business is all about people and that does not just mean customers. A business owner is required to undertake many roles. Think about your skills and weaker areas. Who can you get to help you? Aside from an accountant or bookkeeper and a lawyer would someone helping with marketing and sales help you get your business off the ground? Weigh up the costs in time and money to yourself and the business against the cost of buying in outside help.
Money, money, money
More businesses struggle over cash flow in their first couple of years than anything else. It makes sense to err on the side of caution. If you think you will make x sales in a year think about halving your target. Don’t forget your living expenses and make sure you have some contingency for those unexpected problems that crop up. Factor in slow payers and don’t underestimate your business expenses.
Although you may have little idea as to where you want to go with your business, thinking about it upfront helps create a strong sense of direction. You may just want to make money until you retire. If you could create something that makes you money and that you can sell when you retire, you will be adding value from day one.
You may feel quite reluctant or even a little daunted about writing a business plan. But it is the planning process that is more important than the finished document. Writing it down helps you pull your thoughts together and gives you something to work and with refer back to – and of course if you want some financial backing you can prove to your investor that you have thought through your business, and have evidence for how you will make it work for them too.
Jacky is a business and life coach who works with individuals and small businesses. For more information she can be contacted at firstname.lastname@example.org