The Oxford Dictionary defines a Business Plan as:
“A document setting out a business’s future objectives and strategies for achieving them.”
The UK Government’s website adds to this by saying:
“A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts.”
A business plan, therefore, is not only about objectives, but also how one plans to go about achieving those objectives. Far from being merely an administrative exercise required for obtaining a loan, a business plan also gets one’s “head in the right place” about proceeding with the endeavour.
You need to know upfront how you plan on making your business viable long before you open the doors.
Here are the general steps to creating a great business plan.
To name your objective correctly, you must think of your eventual client and customer. What do they want?
Do they want “the best coffee in all of London”? Do they want “high-speed, reliable internet at a fraction of the cost”? Do they want “pizzas so good they’ll make your mouth water just thinking about them”?
Your objective is what your business is going to produce.
Too many people lay down as an objective, “To make a lot of money”.
Yes, all businesses must be profitable to keep going. But this is not an objective for your business, and won’t get any investors or bankers interested in giving you a loan for it.
An objective is something that interests the client.
Once you know your objective, the strategy almost writes itself.
If your objective is to create the “best tasting pizza at a fraction of the cost”, then the strategy would include:
The key is to get your objective down nice and clearly. The strategy is then up to the limits of your imagination.
Bright ideas are great, but sales have more to do with the nitty-gritty than with great concepts.
Marketing is one thing, and the sales section of your business plan will touch on it. But Sales is a thing in itself.
To get sales, you must have a salesman. Yes, that’s obvious.
Or is it?
Do pizza places have a salesman? And, if they do, does the salesman attract interest by being friendly and approachable, or do they repel as a result of an overly aggressive approach?
What bright ideas can you come up with to make sales? What will it cost to make sales? How much profit will each sale make, and how many sales a month must you make to get out of the red?
The sales section of your business plan is both sobering and challenging. Failure to do this section well might put you into the 50 per cent of startups that don’t make it. It’s vital to get this done correctly.
Good marketing should lead to increased sales. But thinking up a marketing strategy is less about the details and more about how keen your ingenuity is.
It’s also easy to get carried away with marketing ideas. There are expensive ideas which are not necessarily effective at getting sales.
Even if your goal is brand awareness, sales are still the only measure you have of the marketing campaign’s success.
To impress investors, you need to think this through thoroughly. Instead of putting something generic like, “Get on Social Media and promote like mad!” you need to think realistically, and put down actual numbers, then back those numbers up with stats and studies.
Write something like, “According to Study X, written by SEO Expert Y, Z number of social media posts a day results in a guaranteed 50 per cent increase in sales. To come up with Z number of original posts, the following people and software are needed.”
Impress your investors by showing them that you have thought your marketing plan through and are not just some Johnny Come Lately with a bright idea.
Finally, the big question that investors and banks want to know the answer to:
If you’ve taken your time on the previous steps and haven’t been unrealistic, you’ll have an answer for your financial forecast that is both accurate and achievable.
There are angel investors who are wildcats, just as there are investors who only fund the sure thing.
Show your potential investor that you’ve done your homework and that your startup is a sure thing that will give the investor a positive return.