Publications
Partners
A business plan is a key step in starting your own venture, but for many start-ups, it's also a step that is skipped in the excitement of starting to set up the business. Here's how to lay one out.
Making the decision to start your own business takes bravery, vision, ambition… and planning.
A business plan is a key step to take in your entrepreneurship journey. Not only does it force you to think about all the different aspects of your business – from who your customer is, the size of your market and how you’ll advertise your product or service to how much money you need to get up and running, what skills you’re missing and who your biggest competitors are – it’s also a document that comes in handy later on. For example, you’ll use it (likely a revised version) when applying for finance or planning your first marketing campaign.
But for many start-ups, the excitement of starting to set up the business distracts from the need to plan. Set aside time to develop your business plan, and see it as a work in progress, something you will continue to update as you uncover new information about your customers, the industry you’re entering or financial obligations.
Google "business plan" and you will quickly find thousands of variations, because the truth is there is no set format, length or template. You should compile a plan that works for you, but there are certain details that you should aim to include.
READ | Llew Claasen | How to attract international investors to your South African startup
Business plan basics
Executive summary: This section is an overview of everything that’s coming in the business plan. This is the most important part as it will convince an investor, financier, partner or the like to read on.
What to include:
- A brief explanation of your product or service
- Short introduction to the directors of the business
- Overview of employees
- Your unique selling point – why will you be successful?
- The current status of your business (including financial standing)
Company description: Now you can start going into more detail. In this section you’ll talk about the business you intend building.
What to include:
- Legal entity (e.g. sole proprietorship, private company, etc.)
- The problem you are solving
- Your competitive advantage
- Expertise, track record and skills your business has at its disposal
- Recruitment – will you need to hire employees, at what point can you bring new people on board, how will you do this, who is your ideal employee?
Market analysis: This is where you expand on the opportunity you have identified for your product or service and the viability of building a business out of that opportunity.
What to include:
- The gap you’re planning to fill
- The size of your target market
- Your ideal customer profile – who are they, what are their buying habits, can they afford what you’re selling, how badly do they need your product or service?
- Trends in the industry – is the market growing, evolving or being disrupted?
- Your competitors – who else is after your customer? They might not even sell the same product as you (e.g. a travel agency is not only competition for other travel agencies, what about online booking services or the suppliers themselves?)
Product/service: Find out every detail possible about what you are selling.
What to include:
- Specifics about what you are selling or doing, including suppliers, availability, quality, materials, lifespan, etc.
- Product lifecycle or service process – i.e. how long will it take you to get your product into the hands of your client or for you to provide your service once it is requested
- The price of your product or service – is it a fair price for what you are offering? Is it a price your customer will pay? And, will it bring in enough revenue to cover your costs plus leave you with the kind of profit you’re hoping for?
Marketing and sales strategy: This is an important part of your plan. In fact, you might want to create a separate marketing and sales plan for your business and just include the key points in the general business plan.
What to include:
- How you intend to promote your product/service to your customers – this includes the channels you will use, your branding, the most effective way to reach your target market, how long you will run certain campaigns, what you’ll say about your product, etc.
- Marketing budget – the amount of money you will need to promote it (or, more importantly, how much can you afford to spend?)
- Sales mechanism – how will you sell the product and how will customers pay you? Are you setting up an online business? Do you need card facilities? Have you got a professional invoicing system? How will you handle refunds or returns?
Financial projections: Time to do a reality check and put accurate figures down based on the information at your disposal rather than guessing or hoping.
What to include:
- Business model – how will your business generate income? Are you reliant on large volumes of sales? Or are you planning to establish long-term contracts with loyal clients?
- Cost and expenses linked to running your business and sourcing or creating your product.
- Capital needed to get started and how you will raise these funds.
- Breakeven point – how long will it take you to start making a profit?
Thinking about each of these points is not enough. Write down your plans so that you can refer to it as you progress with your business, and don’t forget to update it as things change. A business plan is also incredibly useful when you’re ready to scale your business.
MORE HELP FOR ENTREPRENEURS:
- Want to register your business? Read this first
- How to choose and register a name for your business
- 10 things every new business owner should know about tax
- Why your business needs a website – and how to get one
- The number 1 reason most start-ups fail – and how to avoid it
- When to ditch your day job and launch your own business
- Your business: Here's how to price your products
- Your own business: How to make your first sale
- Your own business: Hiring your first employee
- Your business: How to pay yourself, while keeping company expenses separate
- Five ways to increase the profit margin of your business
- Setting goals for your new business – where to start
