One of the first, and most important, steps on your journey towards being a successful business owner is writing a formal business plan that you can not only show to the bank to help you get the startup capital you require but which will serve as an important document that outlines your new business’ trajectory from your target audience to your financial projections. That’s why it’s important that you take your time to get it right.
Obviously, every business is different, so every business plan will be different. That being said, there are typically some essential aspects that should be included, several of which are often overlooked by budding new entrepreneurs. With that in mind, we’ve put together a lot of oft-forgotten things you should not neglect to include in your next business plan…
What your business does
This is a pretty fundamental question, so it’s surprising that more people don’t take the time to actually really think about and outline exactly what it is that their business does. What problem does it solve? Why would anyone want to invest in it? What benefit can it give customers that other products on the market can’t? If you can’t answer these simple questions, finding investors, let alpine customers, is going to be pretty difficult.
It’s also very useful to work out what your business’s core values are going to be. Although this probably isn’t essential. It can be helpful for you to work out what kind of business you want to be, which will make it easier for you to cultivate the right kings of culture in your company going forward. It can also be a good hook to get investors interested in your business, especially if they share the same values that you do. So whether you care about the environment, social responsibility, or taking exceptional care of employees, think about how to make that happen and include it in your business plan.
Customer churn and market shrinkage
When you’re writing your business plan filled with optimism about the birth of your new business, it’s natural to focus on the positives like projected growth, but business is hard, and sometimes things don’t work out exactly as you had envisioned, which is why it is just as important to think about the negatives like customer churn and market shrinkage. Even if that doesn’t happen, having made provision for it – say a 10% backward step every 12-18 months- will make life easier for you because you’ll have planned for the possibility of it happening.
We all know that businesses need to be plugged if they are going to catch the attention of their target market and bring in as much revenue as possible, but still, many entrepreneurs neglect to take into account the true costs of marketing their companies when they come to write their business plans.
The problem is, now that internet marketing is a thing, many people expect it to cost less than the old way of doing things, but that is not necessarily the case. If you look at the true cost of things like paid ads, SEO marketing, and influencer collaborations, you will see that they can get pretty expensive, and that’s why proper budgeting for SEO, internet marketing, and offline advertising is something you should put a lot more thought into than you’ve probably considered. Do your research, get a realistic picture of the costs, and maybe you won’t end up with a shock when the time comes to market your stuff.
Another cost that is often underestimated by new business entrepreneurs is that of hiring staff. So many first-time business owners think they can do everything from keeping the books to inventing new products on their own, but this is rarely the case and there will inevitably come a time – usually much sooner than you think – when hiring extra people is a must. With staff, come salaries, insurance, benefits, and…well you get the picture. Be prepared!
Emergency funds are often something that we think of in terms of our personal finances, where having a sum of money put aside can help us get through financial emergencies like needing a new car or paying the vet’s bill without too much difficulty. However, businesses should always have an emergency fund, or operating reserve, to get them through the tough times too.
So many business founders are so sure that their company will be a roaring success that they don’t plan for any emergencies, which means they don’t have any excess capital available to get them through lulls in business, the price raises on raw materials, or seasonal slumps and things of that nature, and that can be enough to put them out of business for good. So, be sure to work an operational reserve into your business plan if you want to give yourself the best possible chance of success.
A lot of entrepreneurs make the mistake of thinking that customer service is not as important as it really is, and even those who do know how vital it is in terms of marketing and sales, often don’t think about providing for it in their budget. If you want to start your business ahead of the game, though, you really do need to include it in your business plan from the get-go. You need to have money set aside for things like customer service training, righting wrongs when customers complain, offering the customers an excellent user experience, and…well you get the idea with that.
Your target audience
When you’re drawing up your business plan, it’s really important that you take the time to think about your ideal target audience. Too many businesses end up stretching their finances too far by trying to target too diverse an audience, all of whom require different marketing techniques and product features to be financially viable for long. That’s why spending a little money on market research and really refining your audience before you create your business plan is a really smart idea that will see you do better.
Successful businesses all have one thing in common – brilliant staff. So, even at the stage of writing your business plan, you should be thinking about your HR budget and the amount of money you will need to spend in order to attract and keep the best possible talent in your industry. If you fail to do this, you probably won’t attract the best people and it will be harder than it needs to be for you to get your business doing and make it a success.
When you’re starting a new business, you’re thinking about the immediate future – you aren’t worrying about what will happen when your business takes off, but you really should. Instead of using standard projection templates to see where you should be in five years, and doing little else, you should also be building a plan for how you will capitalize on successes to grow and scale your business in 5, 20 even 16 years from now. After all, it’s hard to reach your destination when you have no idea where it is you’re actually going!
This may seem like a lot to get into, and it is, but if you do it at the beginning, and include these essentials in your business plan, it will make your life as a business owner a lot easier down the line, when you have a solid document you can refer back to, which will keep you on track.