Angels Den Blog

Anyone who’s ever started their own business—and succeeded—knows just how important a good business plan can be. A good business plan is a road map to the life cycle of your venture: from joyous conception, to successful maturity and the ultimate exit strategy. To be classifiable as a ‘good’ business plan, it will require careful preparation and focused attention to detail to define every step along the way.

A business plan can be a complex document, but, when you remove all of the waffle and filler, it can be boiled down to the following four essential elements.

1. What is your business concept?
Every business is built around a concept and a vision. The more clearly defined this concept is, the easier it will be to know how to focus and grow the business. For example, the concept of ‘Joe Smith’s Furniture’ might be something like:

Joe Smith’s Furniture will sell high-end dining and coffee tables to young, fashion-conscious professionals over the Internet.

Defining his concept at the beginning helps Joe to establish a niche for his business—an area in which he specialises that sets him apart from his competitors.

If you ever need to seek additional finance, your business plan will show potential investors that you have thoroughly considered your venture, and have a clearly defined idea and direction for your venture. All too many new business owners make the mistake of trying to be ‘everything to everyone’, rather than narrowing the focus of the business to a specific niche market.

2. How will you let everyone know about your business?
Crucial to every business plan is its sales and marketing strategy. Well before you launch your business, you must know to whom you will be selling and how you will promote your products or services to them.

Again, all too many first-time entrepreneurs design their strategies around the mass market—but unless you have a bottomless bank account, this is a difficult thing to achieve. You must define your target audience—their approximate age, tastes, location, employment, etc—with the accuracy of a police profiler. The clearer your vision of them is, the easier it will be to find them and to sell to them at their level.

How you promote your business to that target audience—online, newspaper, billboards, trade shows, shop front and concessions, and so on—will be determined by the profile you’ve created. Whichever route(s) you choose, your business plan needs to define your strategy and schedule for promoting your business clearly.

3. What stands in the way of your success?
When launching a new business, you need to be fully aware of your opportunities and barriers. These will include: your skills and experience, and those of others with whom you’ll work or whose skills you’ll utilise; your financial position; the economic conditions in which you are starting your business; and, most importantly, what competition you will face.

You must consider direct and indirect competitors, and, if there are none because you are launching a brand new concept, then you must consider what barriers there are to others entering the market and competing with you (in terms of cost, time, expertise, contacts, etc).

A good business plan also looks realistically at local competitors. Out of hubris, the new business owner might be tempted to discount these competitors—but investors won’t and to ignore the risks in your business plan is a foolish tactic. Therefore, a good business plan carefully researches the competition before the business ever begins.

4. Does it stack up financially?
Finally, the perfect business plan must include a realistic three-year or five-year financial forecast. We all know that the facts and figures are the boring bit, and I appreciate that you just want to jump right in and start selling, but it is this planning stage that will provide the most important information for your business. Potential investors will need to see that you’ll make a profit and you need to know whether there is any merit in the venture before you launch headlong into it. A well-defined financial section to your business plan will also provide you with a road map to success against which you can measure your progress.

If you’re new to this sort of thing, ask for help from a family member who either owns his or her own business or is an accountant, or pop into your friendly local bank and see if it can provide you with information. Additionally, you should contact Business Link (which is always good for this sort of advice), or approach local businesses to see how much guidance they will offer.

Good luck writing the perfect business plan. When it’s ready, why not come to www.angelsden.co.uk to discover the best way in which to finance your new venture?