From good idea to viable small business

When I am conducting training in any of my business skills modules, I am often asked the question, “I would like to start my own business – how do I go about putting together a business plan?” So I decided to blog on this topic and include a business plan template to get people started on the entrepreneurship journey. But as I was adapting my own business plan, I realised that I had done a lot of thinking (and a fair amount of actual work) before I put finger to keyboard to type out my business plan. So before you start your business plan, here are a few suggestions to awaken your inner entrepreneur and help to turn your good idea into a viable small business.

Think Big

If you’re in the early stages of conceptualising your idea, I would suggest doing some more big-picture thinking first, but make sure you write down all of your ideas. Here are some suggestions:

  • Brainstorm – this is simply a dump of everything you have in your head with regard to your business idea. Get a large clear sheet of paper and just write – avoid listing or drawing a mind map at this stage – the idea is to get your ideas down onto paper – the messier the better. If you’re working with a business partner, do this exercise individually and then repeat it together. Compare brainstorms.
  • Get more orderly – as you brainstorm, your thoughts will start to become clearer. Now is the time to start documenting your ideas in a more ordered way – draw mind maps, make lists and even start making sketches of what your logo will look like.
  • Read widely – there are many good blogs out there that will encourage you as you go out on your own – I like Freelance FolderFreelance Switch and Signal vs. Noise for general entrepreneurial and freelancing tips. You should also seek out blogs in your business’s area of specialism and subscribe to them using a feed reader – I love my Google Reader.
  • Do a SWOT analysis – divide a blank sheet of paper into four quadrants. Write the headings: Strengths, Weaknesses, Opportunities, and Threats at the top of each quadrant. Think about your business idea and then write down its Strengths, Weaknesses, Opportunities and Threats under the appropriate heading.
  • Establish how you are going to make money. In all the fun of conceptualising and brainstorming, you may get slightly carried away and forget that the aim of any business is to make money. So at some stage, you will need to clarify how it will happen that people will take their hard-earned cash and put it in your hands (or deposit it into your bank account!).

I’ve also come across Google Umbono, which is an “entrepreneurship incubator” initiative which helps technology companies jump start their idea. Of course, we’re not all in the technology field, but I found their list of questions in their application form very insightful and thought provoking, while still being simple and clear. I think any budding entrepreneur should be able to answer those questions of their next big idea.

The business plan

So, you’ve done some big-picture thinking and you’re ready to write your business plan. As you begin writing, think about the intended audience: Are you applying to the bank for funding? Are you applying to another company or agency for funding? Or do you just want to outline the plan and purpose for your business? Whatever your reason is, think about the person reading your business plan – what will they want to know and how are you going to convince them of your business’s viability?

The headings that I would suggest for a business plan are listed below. If you’d like a Word template, then send me a mail and I’ll happily forward you one.

Table of Contents

Insert a Table of Contents [References; Table of Contents] once you have finished the entire business plan and you have finalized the page breaks [Control + Enter].

Executive Summary 

Write this part last. It will be a summary of everything that is in the business plan. Be warned, many “executives” will only read this part, so make sure it’s the best part of the business plan and it should not exceed about half a page (for a 5-8 page business plan) – that’s very difficult for me...

Company Description 

Describe your company, areas of specialism, company values, etc.

People Involved

List all the people who will be involved in the company (this may just be one person). Write a brief biography for each person, giving details of their experience, qualifications (if appropriate) and the skills that they will bring to the business.

Target Market and Opportunity

The target market is the broad groups of people who you think will use your product or service. Then you need to discuss the opportunities that the business can take advantage of. Explain the problem(s) that the business will solve and explain what the business can offer in the existing circumstances.

Strategy: How will the business compete in the chosen market?

Discuss your unique selling features; who you might partner with to advance your business goals; and how your business will set itself apart from any competitors.

Business Model: How will the business make a profit?

How will you charge? Per hour, per day, per product sold?

If you are selling goods, what do you expect your costs to be and how much mark-up will you put on your goods in order to make a profit? Essentially, how are you going to make money from your idea.

Management: How will the business be managed and organised?

Who will be responsible for the overall management of the business? How will the finances of the business be handled? For example, who will keep a record of finances and will the books need to be audited? What resources (computers, equipment etc.) are needed and how will they be managed?

Marketing: How will the business tell the market about its product?

Marketing goes far beyond just advertising and includes all of the ways you plan to market your product e.g. attending workshops or conferences, linking up with other companies who offer a complementary service, offering a free trial or demo, use of promotional material etc. Consider starting a website or even just a blog (Posterous is great) or a Facebook group to publicise your product or service.

Operations: How will the business function on a day-to-day basis?

Here you should explain who will be in charge of running the business on a day-to-day basis and give a brief description of how you will handle the workflow in your business. List the types of operations/functions that will take up the majority of the working week.

Finance: What is the financial future of the company?

Explain why the business has a promising financial future – refer to any examples that illustrate the business’s financial viability. If the business has been in existence, then it may be appropriate to include a summary of the business’s financials here. If the business is a new business, then you may wish to estimate your expected turnover, expenses and profit.

 

Starting your own business does have its challenges. A wise man I know always says that the worst boss you can ever work for is yourself. However, it could be the most rewarding career and lifestyle decision you may ever make. Good luck!