Initially, it takes courage and tenacity to set up your own business. However, initiating the business building process firstly takes hard work and thoughtful planning. Making the right steps are vital in ensuring your business is prosperous and the first stride towards this is to invest time researching, analyzing, brainstorming and articulating your concept in the form of a plan.
What Is A Business Plan?
A business plan is a holistic framework and guide to demonstrating your company idea accompanied by supporting evidence to prove; who you will market your product to, why and how your concept will work and when you will make a profit. Essentially this plan provides proof that you have a legitimate business idea backed up by careful research and planning.
The journey of devising your plan will enable you to gradually compose a concrete conclusion on whether your startup will be successful. This will either give you the confidence to go forth and begin investing in your business or if the idea doesn’t work, it may encourage you to adapt or even rewrite your plan. Either way, it beats spending your money and time into setting up a business without any plan whatsoever, and incurring losses if it fails.
Try to keep your plan simple and to the point, so that anyone reading it would understand what you are trying to accomplish and accompany this with proof that it can be done.
The thought of writing a business plan can be quite overwhelming, which is why this post breaks down two critical components required for your business plan, these are market research and finance.
No one is exempt from expelling market research from their plan, this is a necessary component for both new starters and business veterans. This is the foundation on which your business will rest as it will help you to form a better perspective of the current market. Market research can be divided into two sections, primary and secondary research. Primary research applies to new information you’ve collated, secondary research is the process of acquiring data discovered by other sources. Primary research might include assessing a group of people trying out your new product and recording their comments. Secondary research, also known as desk research, may consist of searching for statistics of the demographic in your area. You can begin by initiating research in the following areas:
The internet provides the perfect opportunity to research your competition without any restrictions, you can glimpse at their reviews, pictures, offers, branding, typical customers, etc. Plus providing they have been established long enough, you can even assess their net worth online through sites such as companies house.
If you’re wondering why this is important, it’s because it gives you an idea firstly of whether they are successful and secondly, rather than focusing on trying to be different from your competitor, copying success is actually far more achievable. For example, if your competitor has a bar offering margarita happy hours for millennial students on Sunday in the same city as you, you could incorporate something similar into your own bar.
As much as it’s essential to learn from a businesses success you also need to learn from their mistakes. For instance, perhaps a law practice competitor is offering a personal injury service, but from your research, they appear to have little presence online. Thus it’s unlikely they are exercising the opportunity of reaching new potential clients on Google.
If you haven’t already done so, start to think about who your customer will be. Try to get precise and discover their age, gender, orientation, interests, income, social status even where they are likely to work. This helps to determine exactly who your audience is and will aid your understanding of appropriate methods to market your product or service to them. For example, for the younger generation, social media is a possible advertising method, however for pensioners, you may opt for print advertising on leaflets and newspapers. The type of customer will depict the way in which you market your product.
This most important outcome of this section is establishing whether there is a market out there for your product or service. If you are trying to set up a tattoo parlor in an area whose residents are mainly pensioners, it’s likely you won’t have a market to reach. Once you understand who your customer is, you can tailor your business to suit these people or adapt your service/product to attract a different genre of people.
Unique Selling Point
What do you offer that no other businesses provide to their customers? Your USP could immerse as a result of your market research. By establishing gaps in the market and potential customers, you may identify something that’s missing which you could provide. This doesn’t have to be groundbreaking just keep it simple and focus on the premise of your business. For example, if you look at HSBC’s sister branch banking company First Direct, they offer a telephone service for banking where you can actually speak to a representative within a few minutes of calling. There’s no automated machine, which eventually irritates you to the point of hanging up. First Direct offers something simple that others banks have not, a phone call which connects to a real person. Simple, but useful and impressive for such a large bank.
To simplify your data beyond a summary, you could accompany this with a graph or chart to further support your claim of a compelling business idea. For instance, an entrepreneur who would like to sell orthopedic mattresses might create a chart with the demographics of your area of people aged over 50, with an income of more than $50,000 a year. This could prove that there is an ample audience who would purchase this product, who are equally able to afford it.
The way you conduct your research is specific to your business. What you learn from it should be an answer to your branding, your selling technique, why your product or concept will work and sell and who will buy it. If these fields are not fulfilled, your business plan has no foundation on which to rest. So get digging, and be prepared to adjust your plan for the sake of forming a company which will work, opposed to sticking to a niche idea that has no audience.
Hire A Market Researcher
For those who are a little lost on where to begin in collecting market research, you could hire a freelance marketer or company to work on your behalf. There are plenty of options to choose from online such as SIS.
This is an essential factor in all business plan writing. The purpose of this section is to plan your upfront costs, a forecast for outgoings, income and potential profit, and lastly explain how you will fund this. For this part, you should keep a close eye on the details and include all overheads you can possibly think of. The initial outlay and monthly expenses will affect the prospect of you making a profit, which should be your primary concern. Because if there are no earnings, there’s no success and without either of these, there’s no business.
You can use Microsoft office, open office or google docs to record your costs. This area of your business plan is never truly finished, and that’s okay. Amending this over time when you think of new expenses is actually a good thing it shows you are not leaving the plan to go stagnant. Here are a few of the areas to consider while developing your spreadsheet.
This is personal to each business idea. You may need to consider office space for yourself and a few employees, a waiting area for customers, a garage space for fixing cars or a warehouse to store goods. Figure out what kind of space you need, where will it be and how much will it cost you. The deposit for renting your place will be an initial outlay, the monthly rental payments will be ongoing overheads to add to your financial forecast. Start by searching online and try contacting estate agents in the area you wish to start your business, to provide realistic costs for renting the space you need. Remember to query administration costs, whether a few months rent is required up front as this will need to be added to your outgoings.
Have you thought about the type and quantity of stuff you will need for your business? For instance, this might be office desks, chairs, a few PCs and servers for an IT business. For a bar, this might be arcade machines, a glass dishwasher, and multiple lounge chairs. The point is you need to consider everything and then proceed to add this to your spreadsheet. Don’t forget to include safety equipment such as fire extinguishers, alarms and so forth.
Who will you need to help keep your business running smoothly? If you don’t have the time to clean the staff toilets and water your plants in the waiting area, you may want to consider adding a handyperson to your outgoing cots.
The type of contractor a business needs varies on the size of your company and the services you provide. A few options to consider are fire safety, waste disposal, and electrical companies. An electrical company, for example, provides added security that the power to your business will be taken care of should you experience a power outage or electrical hazard.
Contractors are essential to most businesses to keep things running where you lack the skills and expertise to complete specific tasks yourself. Selecting appropriate contractors can help you to concentrate on other important aspects that require your attention. If you feel this section is relevant to your business, research relevant contractors, request a cost for their services and incorporate this into your budget.
This will be costs which recur on a weekly monthly or bi-monthly basis: it includes considering things such as the utility bills. Although these may be included in the rental for your premises, so you should always contact the premise owner to gain this information first.
Following creating a spreadsheet of your income and outgoings, you can better discover the potential of making a profit and when this is likely to occur. Always revisit your financial forecast whenever you think of other costs to input or alternative ways to reduce monthly outgoings. This will help fine-tune your projections.
Now that your financial forecast has evolved, you can feel confident to take the next step sourcing options for financing your business.
A few options for funding are:
- Business loan
- Credit card
To avoid the interest charges and risk of loaning money from the bank or using a credit card, you could make use of cash you have saved. When considering your funding options, it’s always worth exploring the choices that will cease to ruin you financially should your business not succeed. Which is why savings, grants or crowdfunding are attractive sources for funding.
Research all of your available options to raise the money you require to start your business. You should aim to achieve the amount you have identified in your financial forecast to cover your initial outlays and outgoings for 3-6 of running your business.
Forming a compelling business plan involves taking all of your notes, scribbles, ideas, and research and presenting and explaining them in a way that any person who read it could understand it. Avoid complex terminology and focus primarily on proving how and why your business concept works. Start by tucking and fleshing out the market research and finance aspect of your future business by making reference to the above sections.