So, you’re thinking of starting a business? Here is a very basic initial starting point, things for you to consider before jumping in. Always remember your goal for starting a business. It’s nice to be your own boss and work the hours you want, but a business exists to make money.
There are many resources available for writing business plans and this is just a proposed layout and key items that should be addressed in a business plan. Some areas may or may not be applicable to the proposal, and can be discarded as required.
Use this as a guide, to form the basis of each initial business plan, which can then be expanded upon and modified depending on whether it is to be presented to a bank, potential business partner, venture capitalist or angel investor.
1. Executive summary – Brief outline of what the business offers. Your vision. Half to 1 page.
2. Principals/key people
- Main people involved in the business – list their background, experience, qualifications, certifications etc.
- Will there be any employees and how many?
- What external experts and contractors will be used and their area of expertise?
- Which lawyers and accountants will be providing advice?
- What about strategic alliances, partnerships and joint ventures?
- Exit strategies.
3. Location and market
- Where will the business operate from – city, location within the city, will there be an office that clients can visit?
- What areas are serviced?
- What is the population within the area?
- What is the potential market?
- How many sales can be expected?
- What percentage of the overall market could be expected to use your services? (ABS and industry statistics could be useful here).
4. Legal requirements
- Are licenses, certifications, qualifications required to run this type of business or to supply the goods or services offered?
- Do business names need to be registered?
- What are council/government or other regulatory requirements?
- Will it need an Australian Business Number (ABN) or country equivalent?
- Should it be registered for GST/VAT or other complying consumption tax?
- What structure will the venture take, registered business, trust, partnership?
- What are the liability issues/risks with each type of structure?
- If using ecommerce, what are the bank’s legal requirements?
- Do you require contracts with key personnel, employees, suppliers etc.?
- Who are they?
- What is their demographic?
- Why do they need or want your product or service? Be specific if need be, describe your typical customer, gender, age group, income, level of education etc, to fully understand the customer and drill down into their head.
- What would your typical customer be willing to pay for your product or service?
- Who are they?
- Do you have a lot of choices for suppliers?
- If it is a product, can it be sourced more cheaply overseas?
- Can you open trade accounts with wholesalers?
- Also include items such as printers for business cards and company stationery, office suppliers, postage and courier services, phone providers for both landline and mobile, insurance providers and landlords if required. For example some landlords may be more flexible with rental conditions such as rent free periods, fit out contributions and rent due dates than others. This will not only help you identify costs and work out your profit margin, but also what your monthly outgoings are likely to be.
- Who else offers this service?
- How easy is it to establish a rival business?
- What is your unique selling proposition (USP) or sustainable competitive advantage (SCA), your point of difference?
- Is the market saturated with this type of service?
- Is it a new or emerging market, which would make it very dynamic, can you change quickly to keep up?
- Where are you positioned in the market, top, middle or low end? Is there intellectual property or something that can be trade-marked.
8. SWOT Analysis – Strengths, Weaknesses, Opportunities, Threats – analyse each of these in detail. Some of these things may be touched on in the other headings; this is where they are discussed more fully.
Strengths could be the knowledge and connections of the principals involved, a niche market, possibility for expansion, USP or SCA.
Weaknesses could include things like what happens when the principal is sick or on holidays (key person risk).
Opportunities could include areas for expansion other markets, parallel or vertical markets, franchise possibilities.
Threats are the possible risks facing the business. These could include but are not restricted to changes in legislation, legal requirements, changes in economic situation or collapse of a specific industry, natural disasters, political interference, restrictions to trade, objections from neighbours, other people, changes to technology, start-up competitors etc.
9. Marketing – This is perhaps the most important area and will require some time and careful thought. People need to know about you, no point being the best widget maker if no one knows it.
- How will the business be marketed?
- How do you connect with your market?
- Options include web site, business cards, flyers, media advertisements (tv, radio and newspapers), YouTube, mail outs, e-mail outs, social media pages (eg. Facebook, Pinterest, Twitter, LinkedIn), word of mouth, links to and from other web sites (important for search engine optimisation), posters, signage, fridge magnets, portable displays, A frames, testimonials and recommendations and mutual promotion with and from other companies (they promote your services, carry your advertising material etc. refer client to you and vice versa), stands at industry events, seminars, for example.
- Is there an industry group you can become a member of?
10. Systems/Procedures/Quality Assurance
- Shipping of physical product
- Keeping client histories and records of previous purchases
- Purchasing goods and stock for sale
- Receiving and making payments
- Handling customer complaints
- Reporting – financials
- Privacy policies (could also be a legal requirement)
- Refund policies (could also be a legal requirement)
- Pricing structure of goods or services.
- Initial start-up costs, including business name registration, web site development etc.
- How much capital will the principals or venture capitalists invest in the start-up?
- When will you get a ROI?
- Does it need to be repaid and when?
- What type and how much insurance is required – Professional indemnity, public liability etc?
- Cost of goods (eg. goods or services to be resold) and fixed and variable costs including administrative such as rent, telephone, postage copying, electricity.
- Include wages and how much the principals expect to be paid.
- Tax requirements -will the business be registered for GST?
- Will annual tax returns need to lodged?
- What is the breakeven point?
- How often will prices be reviewed?
- Goals, eg. achieve a certain level of sales by a particular date or time frame
Appendices – as required
- This would include things such as plans, maps, CVs of principals, sources for statistics
- If possible 3 years of cash flow projections, profit and loss statements and balance sheets. Previous financials if reviewing an existing business to purchase.
- Anything that is too big to fit into the body of the document.
If you’re passionate about wanting to have your own business and determined to make it a success, I say go for it. Never give up or lose sight of your goal. Here are some links that might inspire you.