Top tips for your business this new year, use this chance to grow your business, don't repeat mistakes and take...
A guide for business owners of Startups & SME’s
You have an idea for a business. It keeps you awake thinking about it, you’ve spent innumerable days considering all the ways you’ll be able to succeed and also pictured yourself enjoying the fruits of your labour. You’ve finally convinced yourself to take the plunge and give it your all. So what now? Perhaps it’s time for a business plan.
Accepted wisdom says that most businesses fail within the first year and while this isn’t strictly true, fewer than half are still around after the five year mark. Whilst every business is unique and no single factor is responsible for success or failure, we believe that a sound business plan is more likely to tip the odds in your favour than simply ‘winging it’. Failing to plan is planning to fail!
Besides giving yourself a map to follow, a well written business plan will be useful if you have to explain yourself in order to obtain finance from an investor or bank, attract very senior staff, or even to sell the business on at the best possible price. If your business is without a plan and things aren’t going so well, perhaps a business plan can represent either your road to recovery or a way to show for certain that it’s time to call it a day. We at Lines Henry specialise in helping businesses optimise and recover, if this isn’t possible, we help business owners bow out gracefully. We know a business you’ve built yourself can feel like a part of you, so we’ll always do our best to help you make the right decision, even if that’s the hardest one.
What will be the nature of your business?
It sounds straightforward, but identifying in well defined terms what it is your business will do is an essential first step and will help keep your focus on what it is you’ll be doing. What products or services will you supply? From where will you supply them? How much will you charge? What will make your business unique? All questions you’d benefit from considering early.
Decide on a name or brand identity
Chances are that you won’t be the only business in your chosen sector, so how will customers differentiate between you and your competitors? You may choose a name for a variety of reasons, but ideally, this should be completely unique to the sector your business will inhabit. You may wish to see if your proposed company name is available to ensure you can obtain control of your brand’s name wherever you’d choose to use it. You can easily check if a proposed company name is already in use by searching the register at Companies House. If you’re intending to have a business website you can check if your preferred web address is available at 123-Reg.co.uk and if you want to set up social media accounts, a useful place to check availability across several platforms at once is knowem.com.
Build your business plan
Once you’ve considered all the points above, you’ll be in a good position to start assembling all the varying factors into a comprehensive plan to take your business forward.
Introduce Your Business
You already know who you are, but bear in mind that this section of the business plan isn’t written for you, but anyone you might need to present it to at a later date. Someone who may not necessarily know you very well, or at all. It’s a good idea to make sure the whole plan is presented in a neat professional manner. A business plan on quality paper, neatly bound in a cover may well be taken more seriously than the same thing printed on standard A4 with a staple in the top left corner. Some of the following sections may well be quite extensive for established businesses, some of the people who might read your business plan will not have time to read it all, so may well appreciate clearly marked summaries and seeing data represented in chart or infographic form to help them quickly assimilate the key points.
Set Out Your Goals
It goes without saying that most businesses plan to make a profit, however, what level of profit would represent success for you? Perhaps gaining increased market share is part of your goal? Maybe something else? How will you achieve these? Set out short-term goals, mid-term goals and long-term goals. Being clear about all the things you want to achieve and the timescale in which you want to achieve them will help focus your efforts on what needs to be done and on the strategy which will ensure this happens. If you find yourself falling behind on any of your goals, you’ll be able to spot this early. Enabling you to take swift action to remedy the problem and identify what caused the issue so it can be avoided in the future. The ‘SMART’ objectives methodology is something you might consider when communicating each goal. SMART is an acronym for Specific, Measurable, Achievable, Realistic & Time-specific.
Who are your customers?
The product or service you’ll supply may lend themselves to a particular demographic over others, do you know this group well? If not, you should definitely do some research on them and set out everything you know about them in a comprehensive manner. Who are they? What are their interests? Why would they choose you over your competitors? How will you attract them? How will you keep them? Being able to demonstrate an understanding of your target market, backed up by relevant research, will help you meet the needs of your expected client base and allow you to make a more realistic projection of expected sales.
You’ve probably already seen ‘SWOT analysis’ bandied around in various business groups, but what does it mean? SWOT is an acronym for ‘Strengths, Weaknesses, Opportunities, Threats’. You should use each of these as a heading and list as many things as you can think of for each.
Strengths are the things you or your company do better than anyone else. What is unique about your business? (Sometimes referred to as a ‘USP’ or Unique Selling Point). What advantages do you have that others do not? What do others perceive as being your strengths? Decide how you’ll best utilise your strengths.
Weaknesses, as the name suggest work in the opposite direction. What are you not so good at? What could you improve on? What are the weaknesses others perceive? What can you do to counter your weaknesses?
Opportunities are the cracks your business can drive a wedge into, these are often brought about by studying external factors and noting what about them could be useful. Changes in regulations, shifts in your industry, shifts in consumer trends, advances in technology and numerous other things could well be opportunities if you’re observant enough to spot them and quick enough to exploit them. Leveraging your unique Strengths and mitigating, or even eliminating your weaknesses could also present you with other opportunities. How will you make use of the opportunities you find?
Threats are things that stand in your way which threaten the future of your business. What challenges do you face? Are your competitors outmanoeuvring you? Is your cashflow situation dire? Have you made, or are you making errors that have cost you customers and/or reputation? Which threats are the most serious, what can you do to remove these risks?
This simple analysis can help you identify which direction to take and which things to focus on. It’s also worthwhile going through the same process of SWOT analysis for each of your competitors, beating them at their strengths, avoiding their weaknesses, or both can reveal opportunities to carve a niche for yourself.
Plan of Action
Referring to all the points already made, this is the section to lay out what you plan to do over a given time period. What will you do to attract customers? What changes will you make within your business?
A cashflow forecast is an analysis of money flowing in and out of your business over a set period of time. This should be as detailed as makes sense, showing actual figures from the past and present along with predicted figures in the future.
Most businesses will need to obtain products and services from elsewhere. These might be hire/purchase of premises, hire/purchase of equipment, utilities, business rates, taxes, the supply of raw materials, consumables, legal fees, accounting fees, staff costs etc. A well researched comprehensive list of all conceivable outgoings will give you a solid idea of how much revenue will need to be brought in before the business breaks even. All this should be part of your cashflow.
‘What if’ Strategy
If everything could be predicted, business and life in general might be a lot simpler, however, having a ‘plan b’ ready if the worst should happen can be reassuring for you and anyone else who might be reading your business plan. If something came at you out of the blue, how would you cope? What if your biggest customer defected or went under? What if your most reliable supplier went out of business or doubled their prices? What if your most trusted employees departed and set up on their own? Identifying worst case scenarios might give you additional ideas about future-proofing yourself and helping your business survive the worst of what the world can throw at it.
Keep It Under Review
One final thing to remember is that a business plan isn’t set in stone, it’s a live, dynamic document and, if circumstances change, then the plan should change with them. With this being the case, it’s important to regularly revisit your plan and assess your progress.
At Lines Henry, we understand the importance of planning for the future and while we hope you and your business enjoy all the successes you’ve dreamed of, we understand that sometimes things do go wrong that couldn’t have been foreseen. We’re experts at understanding your situation and providing practical solutions to any problems you might face. We’re here as your partners when times become tough, call us free on 0800 012 6649 or contact us via our website.
Speak with us and feel better.