New research has revealed that a slightly staggering 43% of small business owners don’t have a business plan – or even think one is necessary.
A few more admitted to having a mental plan (20%) – but where does that leave small businesses who are struggling, or just starting up?
Lack of a plan means lack of direction, and a much higher vulnerability to risk that otherwise may not be considered. It’s time to get a plan in place, or dust off your neglected plan and challenge it with these questions. By the end, you should have a clear view of where your business is headed, and why – we’ll see you on the other side.
1. What’s your business name and strapline?
Simple, but a good place to start. Some businesses choose to hire a professional naming service for their business (see this feature piece explaining the lengthy – and expensive – process a professional ‘namer’ goes through to get the job done.)
Unless you have these resources, you’ll want to run some preliminary checks like running a trademark check and putting potential business names into search engines. Small acts like these could protect you from unwanted cease-and-desists in the long run.
2. Can you eloquently describe your key business aims?
What are you actually trying to achieve with your business? What will be your yardstick for success?
Without being real about what you want to achieve with your business objectives, your business plan will always be half-baked. Aim for profits, increased market share, or just survival – as long as your business is aiming for something.
3. Do you have a two minute business pitch down pat?
AKA the “elevator pitch” – a profile of your business that can be explained in the time it takes to encounter someone in an elevator.
If you can’t tell that lucky someone just why your business is brilliant within two minutes, you need to reassess what you provide and how well you’re doing it. Let’s face it, we’re all busy people.
4. Why do you want to run a business?
This is where you need to get introspective. Try to boil down why you’re starting your venture – is it with the happy prospect of being your own boss, or working from home?
Starting a business is, needless to say, a lot of hard work and luxuries like choosing your own hours will come second to the graft. If, however, you’ve spotted a gap in the market or have a strong talent for something (plus an entrepreneurial spirit), you might be on to something.
5. What will you be selling?
You’re likely to be either selling a product or providing a service with your business. Make sure in your plan that you’re able to comprehensively describe exactly what you’ll be selling or providing, plus when you’ll be selling it (i.e. as soon as your business is open, or only in seasonal periods?)
Yes, it’s another obvious one – but it’s one that absolutely needs to be nailed down. This will come in useful if you need to approach potential investors or third party sellers, too.
6. Who is your perfect customer?
Creating a business is only half the work – find the customers willing to work with you is the rest.
The most successful companies know exactly who their target audience is, and can hone their services and communications to best serve their needs, guaranteeing repeat custom or recommendations.
Write a profile of your customer group, or who you think your customer group is – they could be a geographical set, all share a passion or all work within the same industry. The more you know about your customer, the higher the odds are of giving them what they want.
7. Why will customers buy your service or product?
Who wants your product? Does anyone need it? If so, fantastic! However, overestimating the popularity of your business offerings is easily done (sometimes to devastating effect when things don’t turn out as expected.)
If your business idea has been done before by somebody else, is there something else that your business does or has that will draw your audience in? In other words: know your USP.
8. Have you tested the market?
The only way to justify your answers to the previous two questions: market research.
Broadly speaking, market research should flag up any gaps in your plan that you’ve missed. Maybe your customer really isn’t who you think they are – or maybe they are out there, but they’re using a competitor and you’re going to have to persuade them to switch. Without doing the legwork, you could be building your business’s future on dangerous assumptions.
9. Do your financial forecasts add up?
If this isn’t an area you’ve covered yet, you need to get on it ASAP (and not just to lure in financially savvy investors.)
From cashflow forecasts, to profit and loss forecasts, to seasonal forecasts… There are a lot of planning and predictions that need to be made if you want to be prepared and minimise risk from loss.
10. Do you have a back-up plan? (and 10 ½ – if not, why?)
So, when all of the above is decided and settled upon, what will you do when something goes completely wrong? Or something unpredictable throws a cog in the works of your plans?
Expecting the unexpected is hard to do, but if you make a solid plan B you can sleep better knowing that you haven’t put all of your entrepreneurial eggs in one basket. Because setting up a business can have such high stakes, it’s extra important that you include this part of the business plan, even if you’ve never considered it before.
This Forbes article highlights a number of pain points within failing businesses and what you can do before the damage gets too bad, while this piece from The Telegraph case studies small businesses who have managed to turn their fortunes around when all looked bleak.
Have these questions highlighted any holes in your business plan, or convinced you that it’s time to pull one together? See our favourite resources below, all government-recommended, and get planning:
- Full guide to writing a thorough business plan
- Free business plan templates by sector
- Writing and updating a business plan
- Free business plan financial tables from The Prince’s Trust