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Introduction to business strategy and planning
Business planning is a vital part of managing an organisation, and a writing a business plan is an important component of your company set up process. They can help you answer tough questions about your company and help you to identify potential obstacles before you start out on your new venture.
A business plan can act as your guiding document, which can help keep business leaders focused on the wider business strategy. It will be there for future reference – to keep you on track – as your new business progresses on its journey towards success.
There are a few key points to remember before you embark on your new venture, and before you begin to write your business plan.
- Know your target market – Before you embark on a new business it is important to know if there is a realistic market for your products and services.
- Have you done your research?
- Do your products fill a gap in the market you want to operate in?
- Will your pricing be competitive compared to the established players in the market?
- Know your audience – This is important to remember when you are writing your plan. Is the business plan for you and your business to refer to, or is it a plan to help you apply for funding or membership of an association? If your target audience is your bank or a funding organisation, then it could mean you need to include more details about your finances. If your target audience is internal; (for you and your staff to refer to), then the detail could be more in line with who you are serving and how you are going to acquire new customers and serve your existing customers.
- Keep it concise – The reader of your plan needs to be able to see your goals and finer details easily. They need to be able to ’buy into’ the plan. Keep it concise and get to the point.
- Avoid jargon – No one likes jargon, yet it is prevalent in many industries from financial services to marketing. Keep your language simple to understand. Jargon will not make you look more intelligent; it will put the reader off and make your plan overly complex.
- Take your time – To get your market research done and to analyse your financials will take time, weeks or even months. Take your time to get it right as you need your plan to be accurate and clear for future reference.
- Get advice and feedback – Before finishing writing your business plan, or presenting it to a financial institution for a funding application, get some feedback. Run it by your friends and family, and even an accountant or financial advisor. If they can understand it, then you will have an idea that you are on the right track. Either way, be prepared to rewrite your initial draft based on the feedback and any edits that need to be made to your financials.
What is a business plan?
Fail to plan, plan to fail. A business plan is a vital document that you put a lot of time into prior to starting out. It needs to be detailed but concise, and will be a document that you will refer to often as you set out on your business journey.
You will refer to it for the ideas within it. You will also look to it if you are hitting your business goals and if you are missing them.
If you are looking for funding, your business plan needs to be able to convince money lenders and investors that your plan is sound and that it presents a company that can grow and make money.
How to structure your business plan
Your plan does not need to be too detailed, but it will require an easily understandable structure. The first five points represent a substantial proportion of your situation analysis.
- Who you are – Personal contact details for all partners/ directors. Contact details for the business itself. Followed by an executive summary of your business; it is USPs (unique selling points); how you will promote your business; how the business will operate; your financial projections; and how much capital you will need to operate (this is especially important if you’re producing a plan for a funding application).
- What problem/ issues do you plan to solve? and How will you plan to solve the problems/ issues you’ve identified? – Describe your products and services; describe the problems; how do your products and services solve the problem?; how your business will be structured e.g. Limited company, sole trader, Limited liability partnership (LLP); your relevant history and experience including qualifications and professional training.
- Who are your target customers/ clients? – Describe your ideal customers, their location, their demographics, how they shop and where. Describe how you will market to your customers. Inform the plan if you already have customers/ clients and if they fit the target demographics that you have described.
- The market you will operate in – What do you know about the target market? What market trends have you noticed? What feedback have you received about your product/ service?
- Who are the competitors in the marketplace? – Who are the main players in the market? Who are your direct competitors in the market? What do you know of your competitors?
- The SWOT analysis – The SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is informed by the findings in your situation analysis. You cannot perform a SWOT without undertaking the situation analysis first.
In your SWOT you will be simplifying the information you found into the four categories in a table. This way you can see at a glance what you’re business is good at and where it can be improved.
- Your business strategy and execution – Your business plan will have a higher chance of achieving its targets if you have a firm grasp on what you want to achieve within set TIME periods.
This section doesn’t need to be “War and Peace”, a concise list of top level aims will suffice and can be enough for you to refer to in order to help you stay on track.
- Increase new business revenue by 20%.
- Hiring your first employee.
- Growing the team from 10 to 25 employees.
- Expanding your reach by opening a second office location.
Your strategy can help turn your business plan into a focused document that proves to people you’re serious and shows them exactly what you’re doing and how you’re doing it.
- Your business financials – Your financial projections do not always need to be in your plan. For example, you could be expanding your appetite into a new market. However, it is a good idea to include your financials in your initial business plan and certainly in any plan that you are going to present to apply for funding.
Ensure your financials are presented in an easily understandable manner, and have them checked by a financed professional. You will likely want to include:
- Your costs and pricing.
- Your sales forecasts and forecasted costs.
- A cashflow forecast
- Your budget of what income your business needs to survive.
- A balance sheet.
- The appendices – In the appendices you can include any relevant information that you could not fit into previous parts of your plan document. This could be an in-depth statement about your passion for your products/ services/ target market. The personal reasons and your vision that explain why you chose to start your business.
Now your business is ready to start, don’t forget to insure it
As with any important asset, it is important to make sure it is covered in case of an accident, theft, claim of negligence, or any other legal proceeding that may be made against you.
Insurance can also help you to access funding and even win new business contracts.
If you are pitching for new work, in many cases the hiring party will stipulate that you carry certain levels of insurance in case something goes wrong. Public liability insurance is one such cover that is usually required.
If you are applying for business funding from your bank, the lender will typically ask you to provide evidence of your business insurance before they will lend you any money.
Common business insurance policies that are taken out include:
Get a quick online quote today for your business insurance.
At Caunce O’Hara, we are passionate about helping small business thrive. Our content covers many topics you may find relevant and useful to your business. Please do not take this content as professional advice. To find out more on a subject we have covered in out articles, please seek professional assistance.