Starting a new business is an exciting step to take. It can also be rather scary, especially if you overlook the importance of how to business plan.
It's an old adage that if you fail to plan, you plan to fail. So if your business has been conceived on the back of a beermat and you've implemented it in the first rush of enthusiasm, you should not be too surprised if it languishes in the forgotton corners of the internet, not doing very much.
Proper planning can mean the difference between success and failure for your business, but many people don't knwo how to business plan properly. Writing a business plan is seen as difficult, or even sometimes shrouded in mystery.
But there's very little mystery involved.
The main task of a business plan is to organise your thoughts, to ensure that you've considered all aspects of your future business as well as possible at that early stage.
It is easy to get carried away by enthusiasm when first thinking about a new business. If you understand how to business plan, you can take a dispassionate look at your idea and evaluate it properly.
If you're planning to apply to the bank for a business loan, then your business plan needs to be formal and detailed. But if you're writing a business plan for yourself, then the points below should help you work out if your dream business is viable and which steps you should take to be successful.
So here are the points that you should consider.
The first aspect of how to business plan is to think about yourself and the business you're planning to build.
Write down in as much detail as you can what your business is about. Write down specifically what products you are offering, what services you want to provide. You'll be surprised by how many people don't ever do that. They just drift and their business shows it.
Next consider your own strengths and weaknesses. What knowledge, skill or experiences do you bring to the business? In which areas might your need help or training? Do you have the temperament to build and run your own business?
Next, list your business goals. Understanding how to business plan begins with understanding what you are you trying to achieve. Do you want to earn holiday money, bolster your retirement income or do you want to be able to walk from your day job and become wholly independent? If you do not know what your final goal is, you will never put enough effort into your business to reach that goal.
As well as listing your business goals, note down the time frame in which you want to achieve that goal.
If you're starting a brand-new business and want to replicate a £50k salary in three months, then you need to know what you're doing and be pretty nifty on your feet. If you're thinking of replacing your salary over three or five years, you need to know if your business can grow at that rate. More to the point, you need to know if YOU will be able to grow your business at that rate while still in full-time employment.
A key aspect of how to business plan is to consider your customers. Do you know their sex, age, income, occupation, wishes, dreams? Where do they go on holiday? What films do they love? What do they read, drive, wear, eat, drink?
If you don't know who your customers are, how can you successfully promote your products and services to them?
If you are building an online business, do your keyword research. Find out precisely what it is that people are looking for online. Look at the phrases that people use to search for information, as these can also give you an idea of who your customers are. A sixty-year old grandmother who loves embroidery and theatre will express herself very differently from a horse-racing mad, beach-holiday loving teenage boy.
The better you can visualise your customers, the easier you will find it to promote your products and services in just the right way.
Consider your competition.
If you are building an offline business, grab the Yellow Pages. See how many other companies in your area offer the same products or services. Or take a drive through the neighbourhood to see if there are similar businesses around.
If you are building an online business, find your competitors' website. Read the descriptions of their products and services. See if their websites are popular, where they rank in Google and the other search engines, how much traffic they generate.
Consider anything that can tell you if the business you want to start is actually viable. If there's too much competition, you may never make it. If there's no competition at all, is there actually a market for your product or services?
Think of ways to promote your business. Consider advertising, trade shows, offers, social media marketing, internet and email marketing, local business clubs.... be creative.
Compile a list of immediate, medium and long-term actions.
If you are starting a small online business from home you may not immediately want to visit the biggest and most expensive trade show in the world. But if your business takes off, that trade show may well be on your long-term planning list.
If you are planning to build an online business, you may not need very much starting capital, as startup costs for an online business are very low. Beyond paying for a computer, a broadband connection, hosting, and a suite of business building tools there is relatively little cost.
Startup costs for a traditional offline business can be larger, and unless you have savings, you may need to apply to your bank for a business loan.
In this case, your exercise in how to business plan should include s notes on how and when your business will earn money. Your bank's small business advisor, or an accountant may be able to add valuable insights to this part of your business plan.
Finally and most importantly, be positive. Some of the details on your plan may sound daunting at first. But once you understand how to business plan, you will realise what a useful tool it is, how can help you anticipate problems and address them before they become unmanageable and how it can give you ideas on how to grow your business more efficiently.