If you’re a viewer of Dragons Den, you’ll be familiar with the fact that from time to time a contestant is caught out by some quite basic questions relating to how much thought has actually gone into the business idea that is being presented. Once the Dragons smell a lack of homework they adopt a pack mentality and probe even deeper into the research and planning (or lack of) that has gone into the idea. If you’re a new business, or indeed a young business, how much thought has gone into your business idea?
Many of the business owners I am working with today have businesses that have grown organically. Some were set up during the recession as ‘something to do’ or ‘a way to make a living’, others put together a very basic business plan that they’ve never really followed.
A well thought through, well-constructed business plan does not only prove your business case (an essential thing to do when asking for funding) but will help you manage your business as it grows.
Business plans come in all shapes and sizes, however I believe that a business plan should be researched and written as a to cove the following areas of the business;
- Your business or idea – how did you come up with the idea, what are you calling your business, how did you come up with the name, what legal from will you be trading under (i.e. a partnership or a limited company), a description of your products or services and what the benefits are to the consumer, where you are located, who your key staff are and an outline of your short, medium and long term objectives.
- Your market – who will buy from you, how often will they buy, how much will they buy, what they are likely to pay, what do they want for their money, which media do they consume, where you plan to advertise. Then decide who you think your competitors are and why customers may go to them rather than you and vice versa. You should include any market research you have collected on your consumers, a full competitor analysis and details of how you are setting the price for your products or services.
- Your marketing plan – here is where you conduct your SWOT analysis, put together your marketing mix (otherwise known as he 4Ps), outline your marketing objectives and the media mix you will use to reach your target market. It is also a good idea to outline how you will monitor and evaluate response as the campaign takes shape.
- Your operational plan – where your raw materials, products or services will be sourced from, how your products or services be distributed, your location and the importance of it in terms of your business, your staff and the skills they possess, your recruitment policies, quality control, health and safety, .
- Your sales forecasts – sales projections, profit and loss forecasts, cash flow and balance sheet forecasts.
- Financial analysis – how much money do you need, when will you need it, how long will you need it for and how will the investors/lenders be repaid?
I would always advocate attaching appendices to your business plan within which you are able to demonstrate how you came to the conclusions you came to.
By the time we have gone through the process of using various MBA models and tools in order to fully research the business idea, my clients are able to answer any question relating to the content and how they came to their conclusions. More importantly they have a framework within which to run their business and meet their objectives.