Business planning 101
Questions we answer in this guide to business planning:
- What's the point of a business plan?
- How to check if your business idea is a good one?
- What are the steps to starting a business?
- What’s the best way to test a business idea?
There’s lots of advice available for people planning to start a business. But how do you work out what’s really helpful, and really relevant, and even what’s really necessary – for you?
We’ve found from our own experience, and the experience of many of the small business owners within our community (whom we badgered for their startup stories, as well as their tips and ‘things to definitely avoid'!), that keeping things straightforward, bite-sized and in the right perspective is what matters most.
Pulling it all together, you’ll find in this guide what's recommended for anyone starting to flesh out their business idea and who wants to get planning.
What's the point of a business plan?
The main answer is probably obvious – but what may not be so obvious is all the other reasons to have a plan.
1. To make sure your idea is a good one
...and one that will have decent prospects of transforming into a business with a product/service that will sell (the obvious one).
2. To help you keep evaluating your plan, and to keep you on track as you start building the business and managing all the moving parts
...it’s all too easy at times to spend so much time in the everyday activities of building the business that you forget to sit back and take the time to evaluate how well that build is doing and whether it’s keeping to plan.
If you’re ‘off piste’, it doesn’t necessarily mean that you’re headed in the wrong direction. Plenty of businesses realise that their original assumptions or ideas need refining as they start testing their ideas and converting them into real activities/products/services that can be tested with real customers.
Ending up in this position is not a sign of weakness or lack of ingenuity or competence. Some of the best business creators had to go back to drawing board many times before they hit on that magic proposition.
3. To excite those people your ambitions depend on
...like collaborators, suppliers, workers/employees, customers, investors, journalists, etc. You need to be able to talk to others about what you’re doing, why you're doing it, what it means and what you may want them to do with what you tell them, e.g. join you, help you, invest in you, spread the good word about you.
The classic pitch deck formula comes from this early plan:
- who are you?
- what’s the problem you’re solving?
- how are you the solution, and how many people will benefit from it (size of market and opportunity)?
People will want to ask you questions and for you to give them confidence and feel excited about what you’re doing – and so you’ll need to be able to answer these questions concisely and with ease.
4. To convince others to assist you ...for example: grant you a loan (e.g. a bank), a licence (e.g. a local authority), and/or tax relief eligibility (that’s HMRC – see our guide on the best incentives you can ever offer an investor: SEIS and EIS relief.
How to check your business idea is a good one
Horrible though this question is, it’s the first one your customers, suppliers, early-stage helpers/collaborators, future investors, etc. will be asking themselves.
From the very outset, you need to show (not just believe or hope) that the answer is yes. Unequivocally.
That’s not to say that you have to please everyone. Throughout your business journey, wherever it takes you, there will be plenty of people you don't and can't please.
The key thing is to please those who'll ensure you make good money. Everyone else who matters will fall into line if you can prove that what you do sells well.
So, when you’re testing your ideas out, spend time with the people who you want to buy it. Not only can they help you hone your ideas and improve them, they’ll also tell you whether they’d buy it, how they’d want to find it, experience it, what they’d be prepared to pay for it, etc.
And don’t just ask a few people. Do your research well – or find research that accurately backs up what you need to prove.
If you’ve done your market research well, then that will come across to whoever’s reading your business plan.
You should be able to display an excellent level of attention to those details that really matter. However, at the same time, you must try not to be sidetracked by discussing supplemental details that are irrelevant to the reader.
This raises another key question, one of tailoring your business plan to suit the audience you are putting it in front of. There’s no such thing as a one size fits all plan, so you should address what details to include, as well as the language and tone used, for different purposes.
Checklist for starting a business
Here’s our handy checklist to help you measure what distinguishes a good idea that will sell (well) from a bad one that most likely won’t.
This one’s just for you. You can do it on your own, without any pressure, and keep coming back to it over time, if you need to.
Don’t worry if you don’t know the answers to all of these elements right away. The value of the checklist is that it will help you to flag up things to think about before you dive straight in (and maybe before you give up the day job if you have one)!
Read the full guide
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