We’re going to conclude our blog post this week with some final pointers on how to create a viable business plan. Although there are many components to any business plan one of the most important sections will be the Market Research undertaken. This will give the bank or potential investors an idea of the size of the market, the key players currently and how you intend to gain a share of the profits.
Medium to Long Term Planning.
A Business Plan shouldn’t just be seen as a necessity when first starting a business, it should be used as a reference that you continually check back against and adjust accordingly. For this reason alone it is a good idea to extend your financial documents to include 3 or even 5 year forecasts. This gives you a guide to refer back to and amend as needed, using actual figures of sales, costs etc against the projected ones will allow you to see what adjustments, cuts, changed need to be made before it becomes a necessity or the choices are limited.
To have a longer financial forecast is also important if you are looking for any sort of funding. Investors will normally hope to see a return on their monies within this time period, depending upon the company and what they do, they may even be looking for an exit plan or to sell their stake on at a profit although this will be more applicable to Technology companies.
The key to building a successful business plan is to make sure your plan allows you movement for change and that you give yourself a window for corrective action within suitable timescales. Your plan needs to work with you not against you. It must allow some flexibility as changes do occur whether you like it or not.
Market Research – You’d be mad not to!
Am all too common mistake when starting a business is the individual/s are so wrapped up in their own idea that they fail to comprehensively carry out the single most important part of any Business Plan, the market research. It’s all too easy to be caught up with the ‘pleasant’ parts of the planning –designing a website or choosing a company name, buying essential equipment or perhaps choosing an office.
The reality is though, that however wonderful the product is you are selling or how professional the service you may be able to deliver is; your potential customers have to find you, there has to be a desire to pay for the product or service and they have to be happy to pay the amount you are charging. It’s not easy being told that actually I really don’t like, want that or that I wouldn’t pay that much etc etc.
It takes a strong individual to be able to take criticism on board and react positively to it, making changes and adjustments based on what your research has told you. It’s too easy to think so much about a business idea that you become immune to any potential weaknesses or flaws, when you literally ‘can’t see the wood for the trees.’ Ask other’s advice and be prepared to hear things you may not want to, you’re better off making changes before you start the business when it doesn’t cost you money as opposed to being forced to because sales are weak .
Who and where to ask:
- Competition – who are they and what market segments do they serve?
- Are there seasonal factors?
- Do you know anybody who has worked for one of your competitors? It’s essential to find out as much as you can about your business competitors.
- Educate yourself on the business cycle for your industry – it is a key piece of information. This can be gleaned from looking at your competitors and talking to wholesalers and suppliers.
- The National Office for Statistics can provide information on general market sizes – they keep a wide range of statistics on markets, imports, exports. This will help you assess what market share you need or whether your sales projections are realistic.
- Trade magazines are often used by companies happy to brag about recent successes, contracts won or new staff hired. Libraries will also contain a wide business reference section and newspapers are a good reference source too.