Setting up a Business Includes:
How to set up your own business How to write a business plan Advantages & disadvantages of own business How to market your business How to set the right prices for products How to set the right contract / consultancy rates What is professional indemnity insurance
Writing a business plan is a key part of planning and setting up a business - it is really important element of thinking through how the business will run.
There are several elements to a business plan and most of the major elements are included below.
If the plan is only being written to plan out the shape of the business and not to be used for external bodies like banks for loans etc, then it does not need to be as well illustrated, but if it is being used to access funding of any sort from a bank, grants, etc, then it needs to look really good and have a few images and be well set out for the maximum professional impact.
The business plan can also be updated, possibly each year to reflect the changes int he business and to act as a guide, possibly along with an action plan to ensure that the goals are met for the following year.
Having a business plan along with an action plan helps you to stay focussed on what the aims are for the business.
Writing business plan
When wring the business plan, it helps to be as logical an honest with yourself as possible. If weaknesses are flagged up by it, then they are best addressed at this early stage. If not then others including a bank manager (if you are applying for a loan), anyone reviewing it, or you will discover it when you actually start the business. Best to be prepared and address any issues as much as you can at this early stage, as many others will crop up later.
There are some key elements to any business plan. Although they can be tailored to suit the different requirements for different business models, they generally have a similar format and have the same major elements and sections.
If they are being presented to external bodies, the it is necessary to ensure that it is very well presented with diagrams and illustrations. The level of presentation will have an impact on the reader and this is often part of the evaluation process - if someone cannot put a good looking presentation together then they are likely not to be able to runt he business as well.
It is always best to write a business plan of your own. If you do apply for a loan, grant, etc it is quite possible that they may want the plan set out in their own format, but having your own one written beforehand will mean that all the hard work has been done, and it is most likely that most of it can be copied and pasted into their format.
Business plan main constituents
There are sever sections to a basic business plan. Although there are no hard and fast rules, it is always best to address these main areas, additional areas can be added is needed.
Title: There is more to the title page than might be expected as it will include the business name. If the business consists of a single person, then it may be fine to trade under your own name. In many cases it is necessary to become incorporated, having a business company. It is always best to take advice on this, normally from an accountant or other qualified business professional. There can be significant advantages in protecting yourself where there could be legal issues: negligence, copyright infringement, etc could all occur and in many countries having an incorporated business can give some level of protection. There may also be legal tax advantages, etc.
When selecting a business name there are some points to consider:
Unique name: One of the key requirements when registering a business name is that it should be unique. Different countries have different regulations, so it is always best to cheque. Normally an account will be able to advise.
Sounds good: It obviously helps if the business name sounds positive and upbeat. It should also be memorable and in this way people will remember thee business better.
Gives an insight into the business: Ideally the business should have a name that gives some insight into the activity of the company. That said, sometimes it helps not to be too specific because you don't want to have a name that is not suitable if the direction of the company changes a little.
Check meaning in other languages: It is very important to check that the business name does not have any unfortunate translations into other languages.
Domain names: Check that suitable domain names are available, because having a website is essential for most businesses these days, even if it is very simple, it acts as a form of business card on the Internet.
Executive Summary: This page of the business plan acts as a high level summary of the business. It helps to have a shorter overview of the business that can explain the business in a succinct manner. It also helps crystallise thoughts to ensure that the aims can be explained more easily to other people.
Business description: This section of the business gives a full description of the activity of the business detailing how it will start, how it will establish itself, and how it will develop for the future.
Market strategies: The aim of the business is to sell a product for money, otherwise there is no point in having the business - it should also be fun. However to sell the product or service people need to know about it. There are several ways of doing this and they need to be considered and a plan developed, which should be described in the business plan:
Networking: One of the key marketing strategies is to network. People are far more likely to buy a product or service from you if they have met you, know you and trust you. Even if you are already employed and plan to set up a business later, it is always good to have a good network.
It is good to keep a note of all contacts and remember their names. A business card register used to be the way that most people did this, but now a good list of contacts on a computer is more useful with both email addresses and phone numbers. Signing up for LinkedIn and building the number of contacts - this is particularly good because if anyone moves company it is still possible to contact them.
Website: It is always very useful to have a website. Even if it only consists of a few pages, it provides an expanded 'business card' - many people will look at the website as a measure of confidence before doing any business. It should look professional and be mobile friendly.
Attend shows & events: Attending events and shows is a very good way of getting one's name known and for building up a network.
Literature: It sometimes helps to have some professionally designed literature. This will make the company look more professional. When I started out as a consultant I used an A4 sheet folded into three, each section corresponding to the area defined by the folds. It was relatively small, and could be given out at suitable opportunities.
Equipment outlets: If designing a product, it may be necessary to talk to companies that may be able to sell the product. Using a company set up to retail the product can be essential as they will be set up to sell, whereas you may only be set up to manufacture, etc.
All these aspects and more should be covered in the business plan. This will help formulate ideas about making sure you can sell the product or service to sufficient people to make the business viable.
Competitive analysis: In this section of the business plan, it is necessary to be very honest about the possibility of people buying the service or product being offered. It is necessary to define what is termed a unique selling point, USP. It is necessary to offer something that is different that meets a need that will cause others to buy. Ask yourself why people should buy your product or service rather than the others.
If you are new and coming into the market, many prospective customers will have their existing suppliers who they will keep unless there is very good reason to change. Accordingly some market research and self-honesty are needed here.
Design & development plan: It is necessary to look at how your product or service can be developed. It is likely to need some investment - it is necessary to look at how this will be achieved, what the risks are and what the costs may be.
It may be that you are offering consultancy services only, but even these may require extra training, etc in some areas. Think through everything that needs to be done and look at the timescales, costs and risks.
Operations & management: This section of the business plan looks at how the business will function in a daily basis. It is wise to think through everything that is needed. How will invoicing and finance management be achieved, how will the product be manufactured, and anything that is key to the daily running of the business.
Finance : This section of the business plan is one of the most important. If the business does not make sufficient money then it will fail, however much passion and enjoyment, and hard work you put into it.
Fundamentally the key aim is to make money. This can be great fun, and it can be done in a way that fulfils a passion, etc.
Accordingly this section of the business plan must examine the costs, the income and the risks in detail. It needs to be particularly honest because if it does not appear to work when writing the business plan, then the model can be changed to ensure it does work.
Remember that if a load is taken out, then this must be factored in, so often keeping to no loan of the minimum is good. Remember that interest rates can go up.
It is also worth considering, at this stage what provision is needed for sickness of the key business personnel. Even healthy individuals can suffer ill health at some stage. Another consideration is professional indemnity insurance above and beyond the statutory requirements for things like public liability, etc.
Even when the business has been established, it helps to keep the business plan up to date. It may need to be used for other business ventures and deals, so having an up to date plan helps.
In addition to this, the business plan can be modified to act as a review of the previous year and an action plan for the coming year. In this way there are written actions that the business can use to move forwards.
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