Lets get things started (Writing a Business Plan for a Start-up Business)

Member Name: freediveheaven

Product:	Writing a Business Plan for a Start-up Business
Date:	30/07/08 (145 review reads)
Rating:

Advantages: Planning is the key to success

Disadvantages: Takes time and needs updating

The Business Plan for your start up business is probably one of the most if not the most important documents that you will draw up and as such it should be seen as a wise investment to spend some time in the planning stage so as to avoid some of the pitfalls that result in many start up businesses going to the wall. In the current economic downturn and well constructed and realistic business plan is an essential component of any start up business.

The business plan will set out the key development stages of a business over the short and medium term and will have a number of important sections. When constructing a plan it is important to remember that it is being written for two important audiences. The first is yourself and your business partners therefore it is not just a process that you go through for the sake of it rather it is a living document that you will adapt as your business develops. Secondly it is an important requirement should you need to raise business finance either from a bank or a venture capitalist, having spent many years working for financial institutions making lending decisions it never ceased to amaze me when a small business owner would present themselves to try and raise funds with no business plan to put in front of me or one clearly done on the back of a fag packet.

For me a business plan is where you take that initial light bulb moment, the hunch that an opportunity exists, and transforms it into a realistic business opportunity. As such there are a number of key sections that I would expect to see within a business plan for a start up enterprise. There is no set structure that you need to follow however there is some essential information that is expected.

Vision

Now we all may have dreams of owning a building the size of Trump Tower with a business empire stretching around the world but the vision for a business needs to be realistic so if you re setting up a burger bar in the local shopping centre then you vision of competing with Burger King should be put on hold for a more realistic vision of providing a quality service to local customers. It is here that some discussion of the format the company will take, be it partnership, sole trader or limited company and also if relevant, details of the partners and any equity stakes taken.

Financials

Probably the most important part of the business plan and the place where most new businesses fail. It is amazing how many people cannot work out a simple break even amount for the number of sales they need to make each week just to cover all of their costs. For many businesses where the objective in the first year may just be survival then the break even point is key. Most commonly I would see plans that failed to include in the break even amount an income for the business owner or seriously over estimated the number of sales that would be achieved.

Being able to include a cash flow forecast is also key here as well; remember profit and cash is not the same thing especially in a business where you have to give credit to purchasers whilst being expected to pay up front for supplies. Cash flow problems account for many seemingly profitable businesses and a well structured cash flow forecast can ensure that potential problems may be anticipated and actions taken to resolve these. As a lending manager I would much rather lend to a business that can foresee problems in the future and take the right action rather than having a business come cap in hand after being taken by surprise.

Finally within the financials a sound budgetary system is key with tight controls in place to ensure spending remains within the budgeted amount, it is important to budget for all eventualities and to ensure that there is a contingency fund in place.

Marketing Plan

Coming up with a great product is one thing but a clear marketing plan that identifies the business objectives and how these will be delivered is key. In this a sound mix of primary and secondary market research should support the financial projections for the business.

In this section it should be identified whether you product is aimed at a mass market or whether it is looking to take advantage of a particular niche in the market. A key factor to consider is the distribution methods that will be employed, getting your product on the supermarket shelves can take months to achieve with lead times of three months for most big retailers in the UK market. The choice of distribution channel will have a big impact on the operational side of your business as well.

Setting the price of your product should be considered as well as how that product can be promoted and all of this needs to be put in the context of some analysis of the competition and how the business can respond to any changes that competition may take in response to your own business start up.

Operational Plan

This is the section that is often ignored by many start up businesses as it is not seen to be the sexy part of running a business but for the continued success of a business it plays a key part. The organisational structure should be detailed as well as the systems in place required to focus on maintaining a high level of quality control after all very few businesses can survive without repeat orders and a poor quality product or service is a sure fire recipe for failure. Other areas such as stock management and contingency plans should also be identified dependant on the type of business being set up.

Summary

In conclusion setting up a business plan is an important part of the planning process for any start up business, remember that it is not just a one off document produced for the bank in order to get finance but a plan that should help a business succeed and form the basis for future expansion plans and a profitable enjoyable future.

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Summary: Business planning for start ups.