5 Reasons To Write A Business Plan

new business
I would encourage anyone planning to start up a new business to invest some time in creating a Business Plan first. There are many different things you need to consider before starting a business and going through the business planning process is the best way to ensure that you have really thought through everything you need to. A little time up front can save a lot of grief later on and greatly increase the chances of your business being successful.

RELATED: Guide To Writing A Business Plan

Here are my 5 top reasons why you should write a Business Plan.

1. To Show You Are Serious

By writing a Business Plan you are demonstrating that you have properly thought through every aspect of your idea and the plan itself shows exactly how your business will work and why it will be successful. The fact that you can demonstrate through your plan why there will be a demand for your product or service, who your customers will be and why they will buy what you are offering, puts you a big step ahead of someone who just thinks they have a great idea.

This is important if you need to attract investors, partners and even employees and managers to work with you. All of these will need to have good reason to risk their money or their livelihood with you, and your Business Plan can help give them the confidence and assurance they need.

2. To Spell Out How Your Business Finances Will Work

An essential part of your Business Plan will be financial projections. The rest of your plan will ultimately all feed into your projections for income and expenditure during the first years of your business. This will help ensure you (and others) have a clear understanding of where your revenue comes from, what your sales targets will be and any cash flow issues that you need to address.

This work should also show whether any capital investment is required to start the business and identify any times when funding will be required to cover periods of negative cash flow. This information will be vital in attracting any investors or partners. The future viability of your business could depend on being properly prepared in terms of cash flow, as this is what kills many small businesses which are otherwise perfectly profitable and viable.

3. To Ensure You Understand Your Customers and Competition

You may think you have a fantastic idea, but if no-one is interested in buying what you are offering, or if they can get it cheaper or better elsewhere, you don’t have a business. An absolutely crucial part of the business planning process is to identify who your potential customers are and who your competitors are. You then need to be able to clearly show why these people will become your customers. You do this by providing evidence that there is demand for your product and that you can provide something that that will make people choose you instead of your competitors.

You do not know if your business is truly viable until you undertake this work. You also need to show a clear understanding of any trends in your industry or changes in the marketplace. How big is the potential market and is it growing or shrinking?

4. To Spot Potential Problems In Advance

Writing a structured plan forces you to properly challenge any assumptions you have made and can bring to light potential issues that you may not have considered before. By facing up to these things in the planning process, you can identify ways to avoid or deal with them so that they do not become unforeseen problems when your business is up and running.

The flip side of this is that the planning process can also identify new opportunities and whole areas of business that you may not have considered before.

5. To Measure Progress And Keep You On Track

A good Business Plan is something you can refer to when your business is up and running to ensure you are not losing focus or getting side-tracked into areas you had not intended being involved in. By setting out financial targets and key milestones in advance, you can measure your actual performance against these to see how you are progressing.

Your Business Plan spells out exactly what you want to achieve in your business, so referring back to it can help ensure you are focusing your efforts in the right areas.

Further Reading

The Resources section of this site provides a step by step guide to writing a business plan, and other resources for small businesses.

12 Easy Startup Business Ideas

new business idea

Are you itching to start up your own business but not sure where to begin? The right business for you will depend on your own particular experience, skills, personal interests and abilities. In this article there are twelve ideas to get your creative juices flowing and help you identify the type of business that would suit you best.

The ideas below are chosen because they do not require a large investment up front and they can usually be started gradually, even while you are doing another job. In general it is better to start small and build up gradually once you are sure that your basic business model works and that there is a demand that you can satisfy. Jumping straight in with a large investment is by its very nature far more risky.

Some of these ideas will require certain skills, but I have tried to avoid suggesting anything that is going to require more than a short course to get you going.

1. Be A Market Trader

Being a trader on a market is really just the vehicle you use to sell your goods, but what you actually sell is entirely up to you and still leaves you an enormous amount of choice. Markets come in all shapes and sizes these days and there is no limit to the type of goods that you can sell. The good thing about markets is that your only overheads are the cost of the pitch on the day and the cost of the stock you are trying to sell. This is a very low risk way of testing out whether there is a demand for a product, or whether you have got your pricing right.

Remember that Alan Sugar started out this way, so there really is no limit to where it can lead. It is also no surprise that candidates in The Apprentice regularly have to use markets or market stall type approaches in their challenges. It is business in its most basic form – you buy something at one price and sell it at a higher price. It is a great way to test out your business idea before risking a bigger investment.

You will need to find out who runs the markets you are interested in and how to get a street trading licence. None of this costs much, but you are unlikely to be able to walk straight onto a great pitch in an established market. You will want to start off as a casual trader to begin with anyway, as you need to know you have a viable business before committing to a longer term agreement on a stall.

2. Sell Goods Online

The online version of market trading, which again is very low cost and therefore low risk. The most basic way to get started is using a Shop on Ebay, but you could also set up your own e-commerce website relatively easily.

You can be as specialised as you want to be with online selling and your market place is literally global. You can even set things up so that you do not buy goods until you have already got a buyer for them. Just make sure you have thought through the logistics so that you can deliver an efficient service from day one. This will help to build up all important positive customer feedback.

3. A Fast Food Stand

Fast food is not what it used to be – in a good way. There are a growing number of interesting and artisan food outlets that sell from vans and stalls. Sometimes the demand and following that these generate can lead to bricks and mortar businesses.

With any type of food or drink business you need to contact your local council to check what licenses you need and ensure that you are complying with any regulations. Do this at the start to avoid being caught out later. Your basic equipment does not need to cost much and as with a market stall you will need to make arrangements for what pitch you are going to operate from.

Another increasingly popular business that relates to this and the market stall idea is selling home made cakes and biscuits. Home baking is extremely popular now, or rather eating home baking is extremely popular. If you have a particular knack for it, cake decoration is another related field that can be lucrative.

4. Be A Virtual Assistant

With remote working becoming more possible and more popular, this is a rapidly expanding business at the moment. It is ideal for someone who wants to work from home with no initial outlay.

The range of possible tasks that you can undertake is extensive and it is up to you what services you decide to offer. Typical duties will involve a phone answering service and checking and replying to emails. You will need to decide how you are going to find potential clients, but there are websites dedicated to connecting freelance VAs with people who need them.

5. Copywriting

Another area closely related to virtual assistant services is copywriting. This is just being a freelance writer, producing pieces of writing for articles, blog posts, web pages, brochures or whatever else your client requires. This is a huge business, thanks in no small part to the current importance of good quality writing on websites. For a business website to rank well in search engines it needs to have plenty of original copy on its pages, and ideally a blog which is updated regularly.

People from all over the world offer very cheap freelance copywriting services, but the majority of these are just not good enough in terms of proper use of English. A native English speaker with a flair for writing can command a decent rate for original copywriting work.

6. Bookkeeping

This one could be for those more comfortable with figures. If maths is a trial for you, don’t even consider this, as you need to go with something that suits your natural ability. The fact that many people are not comfortable with figures is a reason why there will always be a need for people who can undertake this type of work.

You may need to do a short course or two, depending how far you want to go with it. You certainly do not need to be an accountant as you will not be offering those sort of services. The work of a bookkeeper can cover such things as raising invoices and credit control, payment of invoices, recording and reporting on all income and expenditure.

7. Car Valeting Service

I have become increasingly aware that fewer and fewer people are interested in washing and cleaning their own car and that it is increasingly something that people are happy to pay someone else to do. There is therefore a considerable market consisting of people who will jump at the chance to have their car cleaned at their home at a time that suits them.

8. Mobile Hair And Beauty Services

If you are lucky enough to have had training in hairdressing, this is an obvious choice if you enjoy that type of work. Even if you haven’t any hairdressing experience, the current demand for nail art has opened up a whole new area of work in that field alone.

As people lead increasingly busy lives, the idea of having these services at home rather than having to fit in a salon visit becomes more attractive. With a population that is rapidly ageing, there is only likely to be more demand for businesses that provide services in the home.

9. Dog Walking and Pet Sitting

Self explanatory, but this again fulfils a growing need. Things that people used to take for granted and do themselves are more and more being passed on to others who we are happy to pay for their time. There are literally millions of dogs in the UK, which all require exercise. Many people want dogs but do not necessarily have the time or inclination to take them out twice a day.

In addition to dogs there are many other types of pet too, all of which need attention while their owners are away on holidays or business. A personal pet sitting service is naturally seen as kinder to the animal than the standard kennelling service which is the alternative.

10. Driving Instructor

Another great example of a business that is flexible in terms of how much you commit and enables you to work from home. This is a business for which you will need to be properly qualified before you can start, which does involve an investment in time, effort and some money. Your main options once you are qualified are to be totally independent or to latch onto one of the well known franchises that give a business model and considerable help in finding customers.

11. Handyman and Gardening

If you are handy around the house and garden, there are always a host of jobs that people need doing. Compared to a generation ago, people are generally far less willing and capable of tackling maintenance jobs themselves, and far more likely to pay someone else to do it.

You can start as simply as coming up with a list of the type of jobs that you can do, produce a simple leaflet promoting these services and put it through the doors in your local neighbourhood.

12. Laundry and Ironing

Many people hate washing an ironing, which is what makes it such a great business opportunity. It is not complicated and is a good example of a business that you can start very small and gradually expand as you build up a reputation and regular customers.

What Next?

If you have a business idea the first thing you need to do is create a Business Plan, which will help you identify all the things you need to do to get it up and running successfully. There is a guide to writing a business plan in the Resources section of this site.

8 Ways To Ensure Success For Your New Business

You are no doubt aware that most new businesses fail, so you need to do all you can to ensure that yours will not be one of them. Sometimes great business ideas do not succeed because of a lack of attention to a few key practical areas. By paying attention to the following you can make sure you give your new businesses every chance of success in the long term.

1. Plan Before You Start

The best way to get to grips with all the things you are going to have to do in order to get your business off to a good start is to create a proper Business Plan. This is not just something you put together to persuade investors to come on board, it is primarily a tool to help ensure that you understand every aspect of what you are about to do, making it far less likely that you will be knocked off course by the unexpected. Make sure that a good accountant is part of your planning so that you properly consider things like tax liability, VAT and company structure.

2. Understand Your Finances

You can’t leave financial matters entirely up to your accountant. As the business owner you must understand and be responsible for how your business works financially. Unless you really know what is going on, you are not going to be able to prepare a realistic cash flow forecast, and if you don’t do that you are not going to know whether you need to borrow money, when you need it or for how long. Get this under your belt and take steps to secure the funding you need to cover the times when you may need a cash injection. Cash flow problems are the thing most likely to kill off your business, so knowing when you are going to need cash and making sure you have it in place is vital.

3. Put Agreements In Writing

You are almost certainly going to be relying on various other companies and individuals to provide goods or services that you need in order to carry out your own business. Do not be tempted to be too casual about such vitally important arrangements. Where appropriate use proper contracts, but always confirm everything in writing, paying attention to the detail. When everything is going well it can seem like an unnecessary waste of time, but you have to consider what could happen further down the line if you are not getting what you were promised and when relationships are no longer so rosy.

4. Keep It Lean And Mean

When you are starting up it is wise to try to keep your commitments to those that you can get rid of easily if you need to. Avoid being a direct employer if you can use a freelance person or outsource the function instead. If you suffer a drop in turnover and need to reduce your overheads you need to be able to react quickly to avoid financial problems. Work in partnership if you can and look at ways to share responsibilities with other companies.

5. Spend As Little As Possible On Premises

The type of premises you require will depend to a great extent on the nature of your business, but take care not to commit to fancy or large premises if you could manage without. Ideally you should work from home if your business allows. If you need to meet people you can always go out to them or hire meeting rooms locally if you really need to. Spending money on occasional meeting space is far less costly than the ongoing overhead of having your own premises. You can expand and improve your premises as your business grows. Keep the two things in proportion.

6. Give Some Thought To Health And Safety

Not exactly the thing that gets you out of bed in the morning (unless your business idea is to do with health and safety of course), but this is an area where you must at least have some awareness of your responsibilities as an employer and business owner. Working for yourself at home, this is going to be no problem, but if you have premises, employ staff, have hazardous materials on site or engage in potentially dangerous processes, then you must take is seriously and may need professional input.

7. Take Out Appropriate Insurance

Insurance may not excite you, but not having it could put you out of business. Some insurance, such as employers’ liability, is compulsory, whereas other types of business insurance are a matter of protecting yourself against claims that could damage the viability of your business. Public liability cover is the most obvious one and this is to defend you against claims by any third party for injury or damages. This is particularly important if you have clients or members of the public on your premises, or if you or your staff work on other people’s property. Other options include stock cover, fixtures and fittings, building and contents insurance and professional indemnity.

8. Build Relationships And Networks

Networking is not only a good way to generate leads and new business, but can be a great source of keeping up to date with other issues and developments that can affect your business. The more people in your local area or in your market sector that you have good relationships with, the more options you have for calling in favours or getting help or special deals if you ever need to. People running any sort of business will encounter the same problems that you do, and having people that you can bounce problems and ideas off can be a great help too.

Photo Credit: Business Graph