The plan
A business plan, in its most basic terms, is “a written document that describes your business”. Putting a good plan together is the first big step for anyone who wants to turn their business idea into a reality.
A good plan will “give an outline of your business, the market in which it operates, and how it aims to make money”, says Heidi Maher, national programme manager at The Prince’s Trust, a major youth charity. “It is important to develop the right plan before you launch so that you know if your idea is viable. It should allow you to answer the question: why will your business succeed when so many others fail?”
Over the past 30 years the trust’s well-respected Enterprise Programme has supported more than 80,000 disadvantaged young people to set up their own business. They say the ideal business plan will cover areas such as business objectives, the elevator pitch, unique selling points, your products and services, a marketing strategy and research on your target customers and competitors.
“There is no such thing as being too organised,” says Maher. “Think about where you want your business to be 12 months down the line and set out how you want to achieve your objectives. Take the time to research what is already out there and what your unique selling point is, so that your business stands out from the rest.”
The cashflow
One of the most vital parts of a business plan is a cashflow forecast. In simple terms, this means understanding how much money your business will make, when you’ll start making it and what your outgoings will be.
“Cash is king” when you’re a startup, says Anthony Cork, a partner at chartered accountant and business advisory firm Wilkins Kennedy, who adds that without a financial forecast in place it is easy for even the best business plans to go off-track.
Cork recommends taking advantage of free guides and templates in order to build this and mentions the government’s online resources. More important than following someone else’s advice, however, is making sure that your forecast is something you can understand yourself.
“Not everyone is a spreadsheet guru,” he says, “so start with a blank sheet of paper. What is your income going to be in the first, second, and third months? What will you be paying out for staff, services and other costs? Once you’ve got everything written down, then look into some templates. Keep it simple - there’s no point downloading something if you won’t understand how to use it.”
The “chores”
With a business plan and cashflow forecast in place, there’s a bit of housekeeping that needs doing. This includes answering basic administrative questions about your business, such as: what legal structure will my business take, what regulators do I need to notify (such as HMRC or Companies House), how will I keep accounting records, and what kind of insurance should I have?
Clive Lewis, head of small and medium enterprises at the ICAEW, says sorting out “admin chores” such as the legal structure of your business is one of the most important pre-launch steps. “Are you going to be a sole trader, a limited company, a partnership, a limited partnership?” he says. “The answer could impact everything from your stationary to whether or not you need to open up a business bank account. Limited companies, for instance, must make all transactions through a business account, but this isn’t necessarily true for a sole trader.”
Insurance is another key area to sort out ahead of time, says Lewis. While packages differ, there are certain kinds of insurance that are legally required if your business does certain things. “If you intend to take on employees, contractors, casual workers or temporary staff, you’re required by law to take out employers’ liability cover”, explains Deborah Holland, commercial director at business insurance broker Simply Business. “Without it you’ll put your startup at risk if someone is injured or becomes ill because of their work for you”.
Elsewhere, you’ll also need to put some motor insurance in place if you plan to be driving day-to-day. Neither professional indemnity insurance nor public liability insurance are legal requirements for small businesses, but according to Holland it can still be wise to put these in place as “the right cover can often mean the difference between shrugging off a mistake and struggling to stay afloat.”
The brand
Another major thing to consider is how your business will present itself to the world: in other words, your “brand”. The Prince’s Trust describes a brand as the “identity of a product or service” and says that it should reflect your business’ values.
“Thinking about your brand and branding tools before you launch is absolutely important,” says Alex Bec, a founding director of the popular art and design blog It’s Nice That and sister company INT Works. Founded in 2007, the site now has over 300,000 monthly readers, a print magazine and regular events. For Bec, developing a brand should be all encompassing. “A brand is far, far more than just a logo and a website,” he says. “It’s everything you do, from the way you pick up the phone, to your presence at a meeting and the way you interact with customers.”
When it comes to getting your branding right, Bec says the most important thing is to strike a balance between boldness and over-caution. “Waiting to feel as though you’ve completely cracked it can often lead to needless procrastination,” he explains, “and the worst thing would be to put off a great idea because you weren’t 100% sure about the branding. But it’s equally bad to launch a company that doesn’t understand why it exists.”
The future
Ultimately, getting ready to launch means looking far beyond the first day of trading; it’s about imagining what your business could look like days, months, and years down the line. And that means getting ready for both successes and failures. “If a wheel comes off, you need to know how you’ll react,” says Cox. “For example, your initial forecast should have contingency plans for alternative sources of finance in case something falls through.”
Having a picture of how your business will grow is also vital from a legal perspective, says Lewis. For instance, when do you expect to start paying VAT? “A large percentage of small businesses don’t know that the VAT threshold is £82,000, and the registration process can take a while,” he says. “These are the kind of areas where new businesses can trip up and face some serious consequences. Having a plan for the future means you’ll know what challenges are coming up and how to prepare for them.”
Content on this page has been produced by Simply Business, the UK’s biggest business and landlord insurance provider, and sponsor of the supporting business growth hub.
