Every business needs a Business Plan BEFORE it kicks off. This is to make sure you have a good idea of how you will make money, how much it will cost you to start and run your business and how much you expect to make from your business.
Before you write your Business Plan you should complete the following tasks:
Write your business mission and vision statements.
Every successful business defines their function, direction and reason for being in these simple statements. They give the business focus, goals to aim for and a path to follow. Written well, they provide motivation and inspiration not only for the business, but also for its investors and customers.
A mission statement is written for all audiences, including your customers and investors, but most of all for yourself. It is often a single sentence to describe what the business does, why it does it and the benefit it gives. Consider McDonald’s Mission Statement:
“To be our customers’ favourite place and way to eat and drink.”
And Nike’s Mission Statement:
“To bring inspiration and innovation to every athlete in the world.”
And Amazon’s Mission Statement:
“We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience.”
Each of these give the business its focus on what it does, and what makes it stand out from others. Your mission statement should be similarly purpose-based and customer-focused. Notice that, apart from McDonald’s, these Mission Statements do not fully specify the product or services they offer. This makes sense if your business is likely to move into other business areas in the future. However, your Mission Statement shouldn’t be too vague or generic either. It should contain the essence of what you do.
Unum.co.uk, an insurance company, compiled this infogram of inspirational mission statements.
A Vision Statement is often described as ‘a postcard from the future‘. It’s exactly that – a brief description of your business in a future time when it is up and running. It should state why the world is a better place because of your business and your business values.
A Vision can include what’s been achieved by the business and where it is going. For some businesses, a Vision Statement is more important than a Mission Statement. This is true for startup companies that want to convey to investors how they see the future of their business before it’s even got off the ground. It gives a startup business something to aim for.
A Vision Statement can be a simple sentence, like a Mission Statement. Or it can be a little longer, giving more detail of the business at a particular point in the future, say in three years after startup.
Consider McDonald’s 2017 vision statement:
“To move with velocity to drive profitable growth and become an even better McDonald’s serving more customers delicious food each day around the world.”
And Nike’s vision statement:
“To remain the most authentic, connected, and distinctive brand.”
Both McDonald’s and Nike vision statements focus on the future and continued success of the business. Because they are already well established, they indicate that they are building on what they have already achieved.
Heinz have the following vision statement:
“The World’s Premier Food Company, Offering Nutritious, Superior Tasting Foods To People Everywhere.” Being the premier food company does not mean being the biggest but it does mean being the best in terms of consumer value, customer service, employee talent, and consistent and predictable growth.”
Many companies write Vision Statements like a Mission statement. In other words they start with ‘Our vision is to be the best (or leaders, or to improve people’s lives by doing…etc.)’. However another option, especially for a Business Plan, is to keep to the ‘postcard from the future’ idea and write it in the present tense. This can be particularly good for startups with a three or five year goal in mind. For example,
‘After 3 years of trading, ABC Online Sales is one of the leading and most respected brands of (our type of product/service) with a turnover of £XXX and net profit of £XXX. Our popular and unique range of XYZ continues to get excellent reviews for its (benefits of the product/service) and our customer base extends across the UK. We are about to expand our product range with the launch of XXX….etc.’
Including forecast figures such as turnover amount in a Vision Statement is quite bold. Few companies do this, and it is only appropriate to include a Vision Statement like this in your Business Plan. Your public, customer-facing Vision Statement is better in a single sentence format, like these Vision Statement examples of leading companies.
For a first Vision Statement, it is helpful to have targets and specific goals defined. Obviously don’t over-reach for the stars. Keep your vision aligned with your Financial forecast (see below). It re-enforces your belief in your business model, and helps to convey this to your employees and investors.
A Vision Statement can and should be changed when you’ve reached your vision. It can have new goals, or become more focused on continued growth in a simpler, shorter statement. Start up businesses usually expect to be fully operational and making a stable income in three to five years, sometimes after just one or two years. Your first Vision Statement should be aligned to the first major milestone of your company.
RESEARCH YOUR MARKET
Know your competition and research it well before making any investment.
It’s unlikely that you have a unique product or service, but if you do great! If not, then make sure you know who you will be selling against in your local area, if a bricks and mortar business, or online.
WHAT’S YOUR UNIQUE SELLING POINT (USP)?
Every SUCCESSFUL business has something unique about their product or service or the way their business operates that offers a benefit to customers over its competition.
If you’re entering a very competitive business area like fashion or technology, then it’s even more important to have a USP. Don’t kid yourself that you will make money if there are a dozen other businesses, already established, doing your business idea, with a good turnover and more money to invest in their business than you have. It’s very unlikely that you will succeed.
If you have a niche product or service, for example spare parts for mobility vehicles (I don’t know where that idea came from!), then you can probably easily identify your competitors and think of what you can do different and better than they do.
Of course, when you’re up and running, your competitors will naturally react to the new kid on the block and try to gain business back from you. Great, you’re in business!
KNOW YOUR FINANCES
It’s an obvious point, but your business needs to (eventually) make a profit, or at least pay for itself if it is a non-profit enterprise.
Buying a product for £10 and selling for £50 seems like a no-brainer, but add in the cost of your business location, advertising and marketing, postage and packing (if online), staff costs and your own salary and the costs start to eat into your profits pretty quickly.
Even if you are a one-person business, selling services online with no product outlay or business location to pay for, there are still (sometimes quite substantial) marketing costs necessary to get your business known.
Make sure you have a realistic expectation of your turnover. How many products or services will you sell in years 1, 2 and 3? Many businesses make a loss for at least the first year of trading because of the initial start up costs and low turnover. Can you afford to do that?
Some businesses like Google, Facebook, Netflix etc. made a loss for many years before turning a profit. They were able to do this with a lot of outside investment, because of their GREAT BUSINESS PLAN.
80% of business startups in the UK fail in year one. You don’t have to be one of them if you get your figures right. Find an accountant or business startup service to help you if you need to.
CHOOSE YOUR BUSINESS BRAND NAME
Choosing your business name is one of the trickiest things to do these days, particularly if you will be selling and/or marketing your business online (which is essential for most businesses these days).
You may have already come up with a great catchy brand name, or you may simply want to use your own name. Enter your ideal business name in Google Search and the chances are there is already a website using the name, or there are social media accounts using that name.
Even if you’re not launching your business online now, you may want to in the future, and you probably want to market your business using social media. Ideally you will find a name for your website, Facebook account, Instagram account, Twitter account etc. that no-one else is using.
When you have found a suitable and available business name, you need to register your business name website and social media accounts as soon as possible!
For website names, a ‘.com’ is the most desirable for a trading business. If your business is solely in the UK then you can choose a ‘.co.uk’, but remember you will also need to register ‘.uk’ too because these are separate website domains now.
You may also want to register your business brand name as a trademark to claim its use for you. Registering a UK trademark is straightforward and remains yours for 10 years before you need to re-register.
If you’ve managed to successfully complete the tasks above then, HIGH FIVE, you’re good to go and write your Business Plan!
(This article is a placeholder, links to more information and extended articles on each topic are coming soon.)