So, you have experienced an epiphany, the ‘ah-ha’ lightbulb is on and shining brightly. Well done, it’s time to get to work and make it a reality.
An idea is not worth the paper it’s written on if it’s not acted upon.
We have done our best to make this manual as easy to understand as possible by using common and mainstream language. Where we are unable to substitute a technical term, we have ensured we take time to break it down as much as possible.
We have also provided blank professional templates peppered throughout the manual for your use, you cannot miss them as they are OOB (Obnoxiously obvious, Obnoxiously bold, But not annoying).
To help you understand what a business plan is, why it is important to have one before you dive head in into Entrepreneurship.
To guide you in researching and putting together a high quality business plan
To help you with using your business plan scale to the next phase of your business.
In this tutorial you will learn what a business plan is, the various reasons for writing one and how to research and produce a good one –
- What is a Business plan?
- Why is it important for me to write one?
- Is it a must to have one?
- What are the contents of a Business plan?
- Do I need to follow the contents to the letter?
A business plan also known as Business Case is one of the most important components of a business; it has multiple functions and acts as a snapshot of what your business is about and how it will operate. Having a business plan allows you to be clear on what the business’ goals and aims and objectives are.
Why is it important for me to write one?
As with everything you do, you need a plan. Your plan ensures that you are able to stay objective, identify everything you need, identify things that can go wrong, and then put plans in place to work around them. Think of it this way – You will not start out to cook dinner without at least making some form of mental plan; the ingredients to use, when you will start to cook etc. Same goes for starting a business.
If you also require funding a business plan can support you when you apply for one, be it from the government, bank or investors.
The short answer is – Yes, you need to have one.
The importance of having a business plan cannot be overstated. The Business plan is your business’ blueprint and not having business is akin to trying to build a house without an architectural plan.
Apart from being able to stay objective, define the business’ primary goals and evidence the potential of your business idea to others, a business plan also allows you the ability to track trends in your prospective market and adapt easily. Also, the amount of work that you put into your business plan will be key to securing investors’ interests, as well as provide you with a structured, methodical approach to laying out your business model. For this reason, it’s crucial that you approach a business plan with energy and attention to detail.
There is no set format for a business plan as every business is different and before you embark on writing one it is important to think of the people that may need to see the plan, for example, will you be approaching a bank or investors for funding? Then you will need to provide evidential analysis that your business idea has potential and is capable of turning a profit. Such evidence will include things like your business model, in-depth analysis of the market you are entering your competitors, your Unique Selling Points (USP) and even the risks associated with entering that market. The process becomes easier if you know the person you will presenting your idea to as you can simply ask them what they would like you to include before you start.
The business plan is not a single document, it is comprised of several documents but as guidance you should aim to include the following:
· Executive Summary
· Feasibility Study
· Industry Analysis
· Competitor analysis
· SWOT and PESTLE Analysis
· Marketing strategies
· Porter’s 5 forces
· Product strategies
· Revenue forecast
· Expenditure forecast
· Resource audit
Let’s go through each of them
This is the opening section of your business plan, its describes in a succinct manner what your business is, what it will do and why you believe this will be a good market to enter into. This section needs to convincing and impactful as this is the first section others will see. As a rule, leave this section to the last i.e. write it once you have written all other sections as the section is in essence a summary of everything else.
This is a description of the business opportunity and should also contain information on the market you are entering and also the unique selling points (USP) of your own product or services when set besides other companies that are already in the market. If you have a trademark, patent or design registration, this is where you talk about it.
This is where you evidence that your business idea is feasible. Feasibility study is simply a research into the idea you have, this is where you look a little bit deeper into the idea to see if it holds any promise.
Not conducting a feasibility study in my books is on the same level as chasing fool’s gold….. Go listen to Jill Scott’s Fools Gold to know how that turned out.
Through the process of the study you will have some questions you want answered, these questions will depend on the nature or your idea but generally you want to get answers to the following –
- Is there a market for it?
- Is the market big enough?
- What other similar products or services are out there and how are they operating?
- Are there any legal requirements you need to be aware of (current and future) and can you meet them?
When conducting a feasibility study, always make sure you describe the existing methods or system currently in use by your prospective clients/users e.g. let’s assume your idea is selling mobile phones, you want to describe the methods that are currently in place for people who are selling and buying mobile phones then you go into the problems currently facing buyers and sellers of the existing system and finally you state exactly how your own idea differs and how it will eliminate the current problem(s). This is/are in effect your unique selling points.
This is where you provide a complete analysis on the market/Industry.
o Market/Industry analysis – Here you have to look at the industry as a whole and provide some analysis as to how the market developed, how it has changed over the course of its existence and how it is expected to evolve and how future changes e.g. Legal and Social is likely direct that evolution. For example Let us assume that you are entering the Motor vehicle industry as electric vehicle manufacturer, your analysis will go something like this –
“Over the years the mode of human transportation has evolved and Car ownership has increased by as much as X percent as manufacturing line and engineering technology has evolved and car ownership has become cheaper and more affordable.
In the past 5 years, the sale of electric cars has increased by X percent, this is because the World is more aware of the impact of global warming that is caused mostly by the use of fossil fuels………….”
Your analysis must show that you are well aware of what is likely to happen to the motor vehicle engineering industry, you have to draw information from several points e.g. Government legislations about the use of fossil fuels, recent successes of environmental pressure groups, the direction of new scientific researches into clean fuels etc. The idea is for you convince your audience that the industry will be going a certain way and to do this you need to do a lot of research. If you are not sure about what you should be researching reach out to the members in the (forum – Insert forum link here) and ask for help.
Here you want to analyse your competitors, their business model, marketing strategy, how the World see them, what is being said about them etc. You want to analyse every bit of useful information you can find about them, this is extremely easy, especially in the age of Social marketing, twitter, Facebook, LinkedIn. The onset of hashtags (#) also makes finding specific information all over the web easier as there are now Hashtag search engines like Hashtagify – www.hashtagify.me/ and Hashatit –www.hashatit.com
Your analysis need not to be long either, in fact there’s a model for presenting your analysis that is straight forward and simple and you would have heard it before – The SWOT and PESTLE analysis.
SWOT is an acronym for Strengths Weaknesses Opportunities and Threats. It is a tool used to analyse the internal environment of a company. Simply put, you are looking at strengths and weaknesses of the company internally – these strengths and weaknesses can be the company’s business model, the type of people it employs, its mode of research, marketing etc. The opportunities part looks into what opportunities are available to the company based on its strengths and finally “Threat” is a look at the factors that threatens the company’s operations, for example a company that is failing to employ social marketing will see its market size dwindle simply because they are not reaching out to a large swathe of the available market. An example is the recent demise of BHS and the ongoing demise of House of Fraser.
SWOT analysis can be done on a whole company or just one of its services or products.
PESTLE is an acronym for Political Economic Social Technological Legal Environment and it is an analytical tool that gives SWOT analysis a deeper context and provides a strategic framework for understanding the external influences on a company.
In the following three sections we will go through each component of PESTLE.
Political – What are the political factors that are likely to impact the business?
Continuing with our previous example of the motor vehicle industry, Political influence will be considered as a “Strength”, this is because most countries at the present time are trying to legislate the reduction of greenhouse gasses and they are more likely to favour any company that is innovating towards these political goals, the favours can be in any form such as – Favourable trading policies, policies that are aimed at reducing the tax liabilities of the company etc.
Economical – What are the economic factors that will affect the business? Here you will be looking at things like inflation, taxes, seasonal trends, government economic policies e.g. the ongoing austerity measures of the current UK government means that the government is not spending as much money as previously done and this impacts employment and income and this will have a knock on effect on consumer spending. However, there are some products and industries are immune to economic fluctuations; These are products or industries that provides products and services that are considered essential for example consumer goods, foods and grocers, death and funeral services, communications and energy providers etc. So, if your idea is for a product or service that is considered essential or core to existence, the economic analysis will not be a major focus for you but it may still be considered prudent to at least give a bit of thought in your analysis.
Sociological – What social or cultural aspect will affect the business? In this day and age where we are all immersed is social media; sociological factors are more and more important.
Here, you should asking yourself about how tools such as Twitter, Facebook, Instagram etc. can be used as leverage in the industry and also think about how these same tools can be used to damage your business’ reputation. I’m sure you would have read or heard many damaging posts about businesses and people online.
Apart from social media, think of the accepted cultural norms within the geographical area your business will be serving e.g. would you expect Victoria’s Secret to open shop in a country like Afghanistan or a real fur store open next door to a P.E.T.A office? Hmm????
Technological – What technological changes may impact your business? Here you want to think about current technological trends, maturity of new technologies, legislation on technology etc.
Let’s revisit our electric car example. We are all well aware of the ongoing increase in the demand for electric cars, and Norway recently legislated that new cars sale from 2025 must be fully electric. Now, would you go into Norway with the aim of opening a fossil fuel vehicle manufacturing company?
Legal – Here you need to consider factors relating to laws and regulations that will affect the way your business operates. Think about things like registration with a governmental body, licencing, health and safety regulations, employment law (if you will be employing staff).
Note that Legal and Political may seem similar, in a way, they are however, Legal only focuses on the way that your business must operate. For example if your business idea is to start an Investment consultancy by law you are expected to be FCA registered and if you fail this you are likely to be arrested and sentenced to prison with you being banned from ever being a company director.
Environmental – What are the environmental considerations that may affect your business? Here you thinking things like the impact your business will be having on the environment, reducing your carbon footprint, ecological considerations and even the weather
Conducting PESTLE and SWOT analysis is very big on the research aspects but once that is done its relatively easy and straight forward to put pen to paper. Click here for a copy of the template for the analysis.