Monthly Archives: August 2016

Wha do You Know about Business Planning

1. Write from the audience’s perspective

The starting point for any business plan should be the perspective of the audience. What is the purpose of the plan? Is it to secure funding? Is it to communicate the future plans for the company? The writer should tailor the plan for different audiences, as they will each have very specific requirements. For example, a potential investor will seek clear explanations detailing the proposed return on their investment and time frames for getting their money back.

2. Research the market thoroughly

The recent Dragons’ Den series on BBC 2 reiterated the importance prospective investors place on knowledge of the market and the need for entrepreneurs to thoroughly research their market. The entrepreneur should undertake market research and ensure that the plan includes reference to the market size, its predicted growth path and how they will gain access to this market. A plan for an Internet café will consider the local population, Internet penetration rates, predictions about whether it is likely to grow or decline, etc., concluding with a review of the competitive environment.

3. Understand the competition

An integral component to understanding any business environment is understanding the competition, both its nature and the bases for competition within the industry. Is it a particularly competitive environment, or one that lacks competition? How are the incumbents competing—is there a price leader evident? Finally, including a thorough understanding of the bases on which you intend to compete is vital; can you compete effectively with the existing players?

4. Attention to detail

Make the plan concise, but include enough detail to ensure the reader has sufficient information to make informed decisions. Given that the plan’s writer usually has a significant role to play in the running of the business, the plan should reflect a sense of professionalism, with no spelling mistakes, realistic assumptions, credible projections and accurate content. The writer should also consider the format of the plan, e.g., if a business plan presentation is required, a back-up PowerPoint presentation should be created.

5. Focus on the opportunity

If you are seeking investment in your business, it is important to clearly describe the investment opportunity. Why would the investor be better off investing in your business rather than leaving money in a bank account, shares, or investing in another business? What is the Unique Selling Proposition (USP) for the business? Why will people part with their cash to buy from you?

6. Ensure all key areas are covered in the plan

Undertake research on what a business plan should contain; one good place to find this is at Bplans . Include sections on the Company, Product/Service, Market, Competition, Management Team, Marketing, Operations and Financials. The plan should also take on board the readers’ various preferences for viewing data. While many plans are predominantly textual, the plan should include some simple colour charts and spreadsheets.

7. Do the sums

The numbers will be subject to particular scrutiny. Costs should be documented in full and sales predictions should be both conservative and realistic. While costs are more certain and predictable, a crucial factor in the success or failure of the business will be the level of sales. If you are not particularly comfortable with maths, have someone assist you in preparing a simple cash flow and break-even chart. This will help the reader understand how many sales you must make to cover your costs, and also how much financing you must raise to start up successfully. Remember, at the beginning, there are a lot of start-up expenses in a period of uncertain sales volumes. If sales are on credit (including via credit card) it may take up to four weeks for you to receive the cash.

8. Executive Summary

Arguably the most important component of the plan is the Executive Summary. This is a summary of the entire plan and is usually contained at the start of the plan. It also tends to act as a key qualifier for time-pressed investors—if they like it, they will read on, if not they will go no further. It should be completed at the very end of the business planning process and should have a “wow factor” that entices them to read further. In tandem with this, the writer should also prepare a short “elevator pitch,” a five-minute overview of the key benefits of the new product/service.

Tips for Write a Business Plan

If you, like many entrepreneurs, are time rich and cash poor, option 1 quickly removes itself from the equation, given the cost of having someone write a plan for you.

You are then faced with the choice between using Business Plan Pro or building everything yourself, from scratch, in Microsoft Word and Excel. Why are we not recommending other business plan software options? Because Business Plan Pro is the best business planning software available – without exception. Palo Alto Software (the maker of Business Plan Pro) has a proud history, has had category leadership for years and has extensive lists of testimonials and independent reviews on the website, all corroborating this view. By all means, consider other software options; however, we are confident that your own analysis will reveal that Business Plan Pro stands head and shoulders above the alternatives.

When it comes to using Word and Excel there are undoubted benefits – not least the fact that they are ‘free’ in the sense that they are bundled on most PCs. The interface is also familiar, given the popularity of their use. However, while these tools are excellent when you know exactly what you need to produce, they offer negligible assistance when it comes to producing specific content, such as that required for a business plan. If the purpose of the business plan were simply to jot down a few notes to keep you on track, they would suffice. However, if you intend to circulate the plan to peers, colleagues or prospective investors, you will need to produce a plan worthy of your name. After all, you are the author!

Here are the reasons why we believe that using Business Plan Pro is the easiest way to write a business plan:

1. Offers significant time saving

Business Plan Pro was designed to help you write a plan as efficiently as possible. It comes with extensive help, lots of examples and expert advice.

2. Provides the structure

Business Plan Pro walks you through a list of specific tasks, step by step, in stark contrast to the blank screen and flashing cursor you face when you create a new document in Microsoft Word.

3. Includes hundreds of examples

Business Plan Pro includes over 500 sample plans so you can browse plenty of examples to help give you ideas.

4. Ensures you do not leave out any sections

Over ten years of history means that we know what sections to include, where they should appear in the document and what you need to put in them.

5. Makes the numbers part easy

We recognise that while compiling the financials is an essential part of any plan, it is a very challenging area. We have simplified this process with the inclusion of easy-to-use financial wizards and automatic calculations, linking together all the financials from Start-up costs to Sales Forecast to Personnel Expenses to Cash Flow to Profit and Loss.

6. Free support available

Alongside the extensive in-product help, we also offer a free support line and a comprehensive help facility on our website.

7. Signposts relevant resources at appropriate points

The software also includes links to relevant local resources where you can read specific advice on any areas with which you need further assistance, including trademarks, company formations, and more.

8. Designed specifically for producing a business plan

Whereas Microsoft Word is a general purpose tool, Business Plan Pro is designed specifically to help you write a business plan with the least amount of hassle.

9. Risk free

The time saving alone will easily justify the small cost you will need to pay for Business Plan Pro. However, you can avail of our 60-day money-back guarantee if you are still unsure as to whether it will benefit you.

10. Increases your chances

Finally, for most people a business plan is written for a specific purpose, such as securing funding. You should give yourself every chance of succeeding by producing the best quality plan that you can.

Planning Is Not Just for Startups

One of the greatest misconceptions about business planning is that a business plan is useful only for start-ups. While start-up companies are indeed one significant segment of business planners, business planning is being utilised by an increasing number of companies as a means to manage growth better, to ensure new ideas have been assessed for commercial viability, and to value a business on exit.

Secondly, the importance of the business planning process is often under-emphasized relative to the primary focus on the final output, the business plan. The very process of producing a business plan enables management to take a holistic view of their organization. It helps them give due consideration to the various factors that mesh together to create the opportunity they are seeking to explore, as well as the resources required and the key drivers needed for success. This article aims to justify a more expansive remit for the business plan, by highlighting a number of key areas where its application is of considerable benefit for all companies.

1. Intrapreneurship
Companies are increasingly encouraging employees to create new growth opportunities as competition intensifies in their core (mature) business lines. Mature invariably means competitive, so the focus on growth opportunities is via innovation and creativity, especially in emergent areas. The term intrapreneurship thus refers to “inside entrepreneurs”; where intrepreneurs personify the key characteristics of an entrepreneur, but do so within the company bounds.

Intrapreneurship is not new – 3i, a venture capital/equity investment company, has been one obvious practitioner for many years – and its application of intrapreneurship has helped to spawn a number of new products. Google, a company renowned for innovation, operates a 70 percent rule, whereby employees are expected to spend 70 percent of their time on the core business, 20 percent on related projects, and 10 percent on unrelated new business opportunities. While the generation of new ideas is paramount, ensuring their commercial viability is of critical concern, and writing a business plan is one key way to assess the merits of an innovative proposal in a more rigorous fashion. The plan can thus be produced for an internal opportunity as if it were a stand-alone entity, with the author being required to detail both the opportunity and the resource implications of pursuing it.

2. Managing performance
A business plan can also be used as a management tool to assess ‘actual results’ against ‘planned results’. Using these figures in conjunction with an assessment of year-on-year performance can ensure that managers reflect on performance not just based on the previous year’s achievements, but also in relation to the original planned figures. This enables managers to analyse deviations from plan so as to understand what figures are materially different from the planned ones and what drivers shaped the disparities. It also helps to shift the focus away from solely historic comparisons –instead the manager is tasked with planning for the year ahead and hence there is an agreed goal up front and greater transparency on a month by month basis when ‘actuals’ can be compared with ‘planned’.

Products for Starting a New Business

Starting a business is an incredibly exciting time for any entrepreneur; however it can also be stressful with so much to do in so little time. The start-up phase is also characterized by significant expenditures against a backdrop of uncertain income. However, there are a number of products and services that can help you maximize your chances of success while also saving you considerable time and money. This article aims to introduce you to some of the less obvious ones that are available via the Internet. These products and services can help you set your business on the right path from Day One. While these recommendations will not be appropriate for all, those who need to bootstrap and build their business the hard way will benefit the most.

1. Create a website

Regardless of whether you intend to sell online or not, all new start-up businesses should secure a domain name and create a website as soon as they can. Thankfully, the cost of getting a site set up has fallen significantly over time and there are now a host of different packages and providers to choose from.

Where: Uni-Trader from www.unitechnology.co.uk Cost: RRP from only £99.99

2. Download a profile of your industry

The factsheets, reports and guides from Scavenger are essential reading material for anyone starting up a business in the UK. The Business Opportunity Profiles are downloadable reports on specific UK industries. With over 800 reports in total, the range includes everything from ‘Children’s Day Nursery’ profiles to ‘Coffee Shop’ profiles to a profile on ‘Wedding Planners’.

Where: www.scavenger.net Cost: Individual reports cost around £5.

3. Set up your company accounts

One of the big challenges start-up companies face is managing cash flow. Insolvency is one of the main causes of failure for entrepreneurs in the UK. However, with some careful and appropriate financial planning, cash crunches can be avoided. While this in itself is an important reason for buying a bookkeeping package, there are countless other reasons ranging from the ability to manage invoices through to managing payroll. The two main recommended introductory packages are QuickBooks® Simple Start from Intuit® and Sage® Instant Accounts. View online demos before you purchase.

Where: www.sage.co.uk and www.quickbooks.co.uk Cost: From £43.97 at www.amazon.co.uk

4. Download business planning software

When you start up it is important to write a business plan to ensure you adequately plan the future of your business. The very process of creating a plan is beneficial, not least because it forces you to take a holistic view of your company. Business Plan Pro is the best-selling business-planning software available. It is easy to use, saves time, and has over 500 sample plans to get you started. It is also available via download so you can get instant access to it and hence pay no postage and packing.

Where: Business Plan Pro is available from www.paloalto.co.uk Cost: RRP is only £79.99 for the Standard version and £129.99 for the Premier.

5. Save costs on your phone

Using applications such as Skype together with a headset, it is now possible to make telephone calls from your computer at a very low cost. There is no need to commit to a monthly phone contract with line rental. Instead you can just pay as you go. You can also obtain a Skype number so people can call you back. However it is recommended that all start-up businesses do have at least one fixed line number they can be contacted on. Finally, you should also consider getting a portable number that is easy to transfer if you move offices.

Where: www.skype.co.uk Cost: Free

6. Protect your computer

Once you connect to the Internet, it is important to ensure you have adequate protection in the form of anti-virus software. Many computers these days come with anti-virus software installed already. If not, you should consider downloading Ad-Aware from Lavasoft and AVG anti-virus from GRISOFT. These products are either free or reasonably priced, and are very effective. Finally, it is also recommended that you backup your data to an external hard drive such as those manufactured by Maxtor.

Be Good for an Entrepreneur

On another level, the phrase “dog grooming London” had only 81 searches in April 2006, according to the Overture search, so the U.S. affection for this service clearly hasn’t reached UK shores yet. Half of the searches were for dog grooming courses, so any thoughts of opening a new dog grooming shop in London would need some more clear-cut evidence of demand, given the preliminary findings of this rough and ready search. By analysing the search terms for your idea with these tools, you can assess potential market demand, get ideas for appropriate names for your good or service, and use the findings as one reference point in your analysis.

If the intention is to set up a local service, then familiarity with the local area will be as powerful a resource as any Internet search method. The lesson here is also that ‘entrepreneurs’ don’t necessarily have to be inventors, merely people who can spot opportunities to do something better or more cheaply than others, or provide a local version of a business run elsewhere. Having decided upon the good or service to be provided, a wantrapreneur must research the opportunity to ensure familiarity with some of the key issues. You can search for sample plans from similar ideas on www.bplans.co/uk or look at Business Opportunity Profiles from Cobweb at www.scavenger.net to help you understand your specific business. Savvy entrepreneurs will back up online research with face-to-face conversations with potential customers and other business owners. Finally, an extensive search of Google is recommended to ensure that your market research is as up to date as possible.

 

The ‘Bricks to Clicks’ model

You can also do an analysis of incumbents in the various markets of your potential interest to see if there are inefficiencies or unnecessary costs in the process of getting the goods to the consumers. It is pretty obvious that the Internet has enabled a more efficient means to showcase product wares to a much larger audience (and also a more geographically dispersed one). It is also clear that more traditional retailers with high street stores carry a much higher cost burden. Providing you can configure your business accordingly, there are opportunities here to undercut the traditional behemoths. An online store can take the place of the high street store in many instances and offer the same good or service at a much more competitive price level. Glasses Direct (www.glassesdirect.com) is one such example, where the young British entrepreneur James Murray Wells decided to set up his own online optician as a direct response to the prohibitive cost he believed he paid for glasses while he was a student. Without the overheads of the likes of Specsavers, Glasses Direct is able to undercut the standard retail prices by significant margins while still being very profitable.

The growing rental market for DVDs, spearheaded by the likes of Amazon and ScreenSelect, is similarly targeting the long-standing high street players such as Blockbuster.

They both recognise that ultimately, the consumer just wants to be able to choose a DVD and play it, and this can be facilitated without a costly store infrastructure. If you think something is bad value and you do some research regarding the industry structure, competition, distribution, product components and so on, you may stumble across a brand new idea for improving the overall offering by replacing the most costly elements, such as the overhead on a high street store. Finally, a popular way to dip your toes into entrepreneurship is to set up an eBay shop. eBay even has a facility called ‘eBay pulse’ http://pulse.ebay.co.uk/ which can help you to assess the potential demand for any product by enabling you to see what the hot products selling on eBay are. No prizes for guessing that PlayStations, DVDs and iPods are amongst the most popular.

 

The branch out strategy

While setting up in business always contains elements of risk, there are ways to reduce the levels of inherent risk. The most obvious one is to branch out into an area in which you have previously worked. For example, a Manchester-based nursery school teacher deciding to open her own nursery in Cheshire is a considerably less risky proposition than if she moved overseas to France to open up a boulangerie. Indeed, branching out is how many people start up. After spending a number of years in a particular industry or firm as an apprentice, they decide to go it alone. This is undoubtedly a sensible strategy, particularly as you are a subject matter expert who understands the market and you may have an existing base of clients who will follow you to your new company.

 

The acquisition

Another option to consider is acquiring an existing business. The key here is to have a clear idea of the sorts of industries and geographic locations in which you want to work before you start. Sites such as those run by BusinessesforSale.com (http://uk.businessesforsale.com ) have a database of 1,000s of businesses that are for sale and that may be of interest. While not a low-cost method of going it alone, there are advantages in that the business will already be trading and there will be a record of how it is performing and whether there is room for improvement. One of the critical elements in this option is setting a value for the business. Valuations for a particular business can vary wildly and there is no generally agreed method for valuing a business objectively, although there are several standard calculations which are often used in conjunction. The key challenges are assessing the current cash-generation capability of the business, and realistically assessing its future capabilities. In short, acquiring a business is best left to the more sophisticated entrepreneur who has a team in situ looking for undervalued businesses with strong growth potential.

 

The franchise

According to the British Franchise Association (www.thebfa.org ), “Business format franchising is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.”

Franchising is an increasingly popular route to going it alone. As with the acquisition option, franchising requires that you have capital to invest and are looking to introduce an existing ‘winning formula’ into your own area. There are a number of franchise websites and magazines, such as whichfranchise.com (www.whichfranchise.com) which contain further details regarding the benefits of franchising. Again, once you have decided that franchising is something you want to pursue, you’ll need to decide in what industry you want to franchise. Past personal experiences and franchise coverage in your area should play a role in the decision.

 

The add on

By observing successful products and growing trends it is also possible to piggyback on the successes of others at very low cost. As the saying goes, “success breeds success”. For example, when I searched for “iPod” on eBay (May 2006) I found in excess of 50,000 ‘solutions’. While the iPod has been a phenomenon in its own right, it has also resulted in major successes for the likes of Belkin, which creates cables, cases and chargers for the iPod, Bose, which produces speakers, and Griffin Technology, which produces iPod accessories such as the iTrip, an FM transmitter. In other words, one new product can create a whole raft of opportunities in ancillary products and services. Is there a new product that you can exploit with a complementary device that makes the whole experience of using the core product a better one?

Although the above examples may relate to larger companies, there are also thousands of smaller eBay-based companies benefiting from identifying the success of one item and offering all optional complements to enhance the user’s experience. Indeed, even eBay itself has been the target for one such company, iSold It (www.isolditonline.co.uk ). iSold It is a nationwide chain of eBay drop-off stores that makes it easy for anyone to sell their wares on eBay. The lesson is simple. Once something becomes successful, it is likely to spawn a myriad of resulting opportunities. The key is to identify them before anyone else does.