So, you’ve got a good business idea and you feel like you’re going to be the next Oprah Winfrey. You ran the idea past your friends, and they confirmed what you already knew – it’s a killer idea and you’re going to make lots of money. Be careful – don’t fall into this trap. A winning idea sounds good to your friend and to strangers. Your friends are not your whole target market and they are possibly too much like yourself – and you are not trying to only sell to people like yourself. So, it’s important that you ask people outside of your direct circle. Do proper research. Test your idea on a wide group of people to find out if your idea has merit and if it needs to be adjusted a bit.
Most of us believe we have a very good business idea. Some of us will start a business on our idea, but only few will succeed. Most people will fail. We fail because we don’t have enough management skills, financial skills or enough business experience. But that shouldn’t stop you. If it did, nobody would ever start a new business. The way to counter any gaps in your skills or experience is with proper planning. Sounds boring? It doesn’t have to be.
FAIL TO PLAN, PLAN TO FAIL
We believe in the saying ‘If you fail to plan, you plan to fail’. You can avoid a lot of pitfalls by planning your business properly. The standard way of planning is by writing a Business Plan. But most people feel intimidated by a Business Plan (it sounds like something you would give your bank manager to look at it). Don’t think about it that way. It’s just your ideas written down – for yourself and nobody else. Here you work out what you are going to sell, to whom, at what price, who you are competing with, how to attract your buyer, what you need to deliver your product (or service) and how many people you need to make some real money. Can you write all this down? Sure, you can!
DON’T REINVENT THE WHEEL
But why re-invent the wheel? We can give you a couple of questions to answer that will help you build your business plan. Simply answer all the questions you are comfortable with and when you are done, you would have your whole business on paper. It will be easy to see from your plan if you have forgotten something important or that you underestimated something. Rather make the mistakes on paper than in real life. A mistake on paper can easily be corrected and won’t cost you anything. But when you make a mistake in your business it can be very costly.
BUSINESS PLAN OUTLINE
Think of a business as a chair. There are four legs that keep it up – Marketing, Finance, Management and Operations. If you miss one leg, you can’t use the chair anymore. That’s your business struggling and you’re busy losing money. Miss two legs and that’s your business folding and you’re in a lot of debt. In your plan, you need to think of all four legs.
Get started! Get a lever arch file and have a page for each of the items listed below. These pages will be placeholders. When you complete a section, you simply put it in the file and take out the placeholder page.
The below checklist helps you draw up your business plan. Enjoy!
|BUSINESS PLAN CHECKLIST||Guiding note|
|Contents page||Your contents page should have all the headings in this checklist.|
|Executive summary||Write the summary last.|
|Description of your business idea||Write one paragraph in your own words.|
|Personal SWOT analysis||List what you are good at (like ‘good with numbers’ or ‘a people person’) and what you are weak at (like ‘no business experience’).|
|Description of your target market||Simply say who will be buying from you or use your service.|
|Description of your product or service||Give more detail about your product or service.|
|Pricing||What will you charge for your product or service? Is it cheaper than a competitive product or is the price determined by what you must spend on the product?|
|Logo/trademark/slogan||Do you have any ideas for a logo or slogan? If not, that’s okay.|
|Proof of market research||How did you go about finding out if people are interested in buying from you / using your service?|
|Proof of marketing research||How are other people advertising this product or service?|
|Competitor analysis||Who else is offering something similar? What is their product/service like and how much do they charge?|
|Competitive advantage clearly stated||What makes your offering different? Why will people buy from you?|
|Advertising plan||How will you advertise and how much money will you spend on advertising?|
|Advertisement (example)||Give an example of your advertising. What will you advert look like? If it’s a Google Ad, then say how your Google Advert will be worded, for instance.|
|Business car||Do you need a car for this business?|
|Location of business||Do you need offices and where will your office be?|
|Cost price, mark up and selling price calculations||Do the sums. How much will it cost you to deliver the product or service? How much profit will you add? What will you charge your customer?|
|Break-even point calculations||How many do you need to sell to make back all the money you’ve spent?|
|Sales forecast / sales scenario||How many will you sell each month for 12 months?|
|Sources of finance||Where will you get the money to set up and run your business?|
|Start-up costs||How much does it cost to get started (before you’ve even sold your first product/service)?|
|Projected Income statement (income and expenses)||Simply list all the income you think you will receive in a year and how many expenses you will have. Write it down in as much details as possible. Then work out if your expenses are more than your income.|
|Projected Cash Flow Statement (cash received and paid)||Imagine people are slow to pay you and you can’t use the money generated from sales to fund your business. Work out how much money do you need in cash to operate your business.|
|Balance Sheet||Write down your assets and liabilities.|
|Record-keeping system||How will you keep track of what you’ve sold and spent, and who owes you money and how much money you owe others?|
|MANAGEMENT / HR PLAN|
|Form of business / legal||Is it going to be a CC or Pty (Ltd)?|
|Organogram||How many people will you need in the business? Who will they be reporting to? What will they do every day (what is their role)?|
|Own involvement||How involved will you be in the business?|
|Contract of employment||Do you need or have contracts for any potential staff you are thinking of employing?|
|Supplier analysis||Who will supply goods or services to you?|
|Equipment||Do you need any special equipment?|
|PRODUCTION / OPERATIONAL PLAN|
|Steps in production process (if applicable)||How do you create the product?|
|Steps in service delivery process (if applicable)||How do you deliver the product or service?|
|Stock levels||Do you need to think about keeping stock? How much stock?|
|Summary of business plan and reason why this will be a success||Why do you think it will work?|
We would be more than happy to review your business plan. Give it a go and send it me to review (firstname.lastname@example.org). We love helping people succeed – in class, in business and in life.