Angels Den Blog

There is certainly something to be said for those entrepreneurs who fly by the seat of their pants, go on gut instinct and believe in action rather than preparation – of course, the something that I’d say to them is ’What the hell are you doing?’

There are, of course, some who have succeeded in this way, but they will be the exception rather than the rule, as small business planning is essential for any new venture.

Small business planning may very well be one of the most underestimated aspects of starting, running and growing a viable company from the ground up. The facets that comprise sound small business planning are plentiful, but essentially they consist of research, research and more research.

Initially, the research involved in small business planning deals with market trends affecting the business or product. For example, if you are thinking of selling a health-promoting drink based on the latest tasty berry to come out of Brazil, you are sure to face stiff competition because healthy berry drinks are a bandwagon that’s been full to bursting for some time now. On the flipside, green tea, which has effectively been replaced by the berry, no longer has the same level of competition in the field but lacks the boutique appeal to customers who are ever ready to move on to the latest and greatest product.

In this instance, your small business planning will demand that you weigh the advantages and disadvantages of jumping on the bandwagon or the alternative of going with yesterday’s hot business idea. You may find that neither notion is attractive, or perhaps you will choose to diversify and incorporate both lines into your company. In addition to ferreting out all the information you can glean on market saturation, this is the time to hone your potential customer profiles and demographics. With this data you can develop a marketing approach to woo this segment of the population and perhaps even branch out to include those that are – as of yet – under served. Of course, it is virtually impossible to make these decisions without the proper market research.

The next aspect of small business planning that requires meticulous research is the business plan. This is the ‘calling card’ that will introduce you to potential investors, business angels or corporate entities who are intent on investing in a budding new business. At this stage, the research must include well-documented financial forecasts that make the company attractive, show on paper how it is initially viable and how it will grow, and demonstrate that your plan will take the venture in a fiscally sound and successful direction. Potential investors will want to know that they can expect value for money when they invest with you. Most business angels are shrewd, successful business owners themselves whose primary focus is on the profit they will make from investing in your organisation – without accurate and complete financial and market forecasts it would be impossible for them to conclude that your business is worthy of investment.

It is interesting to note that small business planning pertains also to the human side of running a business. Doing all you can to take the unpredictability out of launching and growing your venture increases your potential for success and can seriously reduce your potential for stress. For example, your awareness that long hours are par for the course if you wish to win your financial freedom and a holiday with friends and family on a sunny beach allows you to suffer willingly the rigours for the joy of the rewards. As long as you know the eventualities, you can plan what to do – to either roll with the punches or counteract the more undesirable ones. This is especially true if you have a family that relies on you – at least in part – for their fiscal upkeep.

All in all, sound research is crucial for starting, running and growing any kind of business. Before you even go in search of your first customer, invest ample time, and money if needed, in quality small business planning.