How To Start Your Own Business. Part 4 - Create Your Business Plan
Your Business Plan: Where Do You Begin?
Oh the dreaded, overwhelming business plan... Where do you begin? Every woman running her own successful business has sat down at one time or another (or daily, in my case) and thought about the direction she wants her business to go.
This is no small task. My business plan has yet to be completed since I first started writing it over a year ago! However, don't let my progress (or lack there of) scare you.
Honestly, do not expect to produce your plan at one sitting. It is necessary to ask many questions of yourself and your business idea. It will be a document that you will go back to and will need to clarify and revise. It will also help to show up the strengths and weaknesses of your thinking at any given point.
What Is A Business Plan?
Most aspiring entrepreneurs have heard of a business plan, however many think it’s something you only need if you're trying to secure funding (i.e. approaching banks for a loan or seeking investors). While this is certainly true, your business plan is also your personal roadmap. It's a living document vital to the development of your business, as it outlines your goals, visions and objectives.
At its most basic, it requires the owners of a business to focus their minds on exactly what their aims and objectives are and to identify clearly how best to achieve these goals. The plan should then highlight what is needed along the way, particularly with respect to cash flow. If the cash flow appears insufficient to achieve the objectives, the plan must either be modified or extra finance must be found.
As time goes on, you will use your business plan to measure your actual progress against your projections. Also, considering the pace of the fashion industry, your plan should always be open to change.
The Important Elements
Usually 1-2 pages in length, this should include all the key features of the plan. Note: It is better to complete the Executive Summary once the business plan is finished, as when the plan is complete you will have a greater sense of the business objectives and how to achieve these objectives.
- What is the purpose of the plan?
- Provide a brief description of the business - to include legal status and capital investment
- What timescale does the plan relate to?
Background and Objectives
This should include an overview of the sector you are entering:
- How do you see the business developing?
- What financial goals have you set?
- Your product and sales.
Product and Sales
- Describe your product
- Describe your product’s market including:
- The cyclical nature of the fashion industry
- The key events and lead times in the fashion industry
- The different ways of operating i.e. wholesale, retail, consultancy
- Describe your intended customer base
- Define/describe your main competitors
- Explain how you plan to expand your business
- Explain where your markets will be and how you intend to enter them
- Explain who will sell your collection and where
- Give details of exhibitions, agents, the other selling methods you have chosen and your standard terms
- Explain how your product will be priced
- Do you have all the necessary skills to run the business? Include personal history, training, CV
- Will you be appointing managers with specialist skills?
- Are there adequate staff resources now and for the future?
- Identify your strengths and most importantly your weaknesses - these are more critical!
- Describe how you will promote your project
- What marketing opportunities exist
- Describe your pricing policy
- Sales methods and selling channels
- Online: website details – include e-commerce or online sales plans (if applicable)
Location and Equipment
- Location of business/studio – e.g. high street, industrial park, size, resources premises/leasehold
- Legal considerations
- Licenses, permits, permissions
- You should also summarise the kind of equipment that you need to set up your business. Each main item should be listed with a rough cost next to it, with a brief explanation of its use and proposed cost.
- Product liability, public/personal liability, fire and left
- Provide forecasts for:
- profit and loss accounts
- balance sheets
- cash flow statements - 2 years from pre-start up stage
- personal survival budget - how much do you need to live and pay all bills/outgoings monthly?
- details of any offers of finance from banks, investors, finance companies.
- break even analysis
- Explain assumptions underlying forecasts
- What are your initial expenditure requirements?
- Describe how you propose to raise the money
Sometimes called SWOT analysis (Strengths, Weaknesses, Opportunities & Threats)
- Describe your product and how it will develop over the years
- What are your production processes?
- Details of market research
- CVs for the business owner and any key personnel
- Details of any examples of marketing or sales materials, website, images, lookbooks
- Product and sample images
You are the only one who will know the business idea inside out but it is very important, however, to have the plan checked by professionals. Look out for my next post: Part 5 - The Scary Stuff: Legalities, Licenses, and Permits
This is the fourth in a series of articles on How To Start Your Own Business.