If you want to be self-employed, you face a huge mountain of tasks. One of which is a business plan—as popular with founders as a dentist appointment to school children. Jan Evers from SmartBusinessPlan explains why he doesn’t think this should be the case.
Writing a business plan not only brings exciting insights but can be really fun. Hard to believe, but true! It’s important to realize that a business plan shouldn’t be created for the bank, but above all for yourself.
In fact, a business plan offers you the perfect opportunity to think through your own idea thoroughly and to design a concrete plan of action that you can implement. Your business plan is there to check your idea and assess all the risks so you can make a balanced decision. After all, you’re the one who carries the greatest risk. So consider your business plan as a compass, which will help steer you in the right direction through the turbulent start-up period and guide your company into safe waters.
Don’t panic on the Titanic
Do you have a mini panic attack when you hear terms like “competitive analysis” or “liquidity planning?” Or think that there’s no way you could do that? Well, you’re wrong!
Suppose, for example, that you want to open a barber’s shop and make a competitive analysis. Just take a look around your city and note how many salons you can find there. How do they look and what kind of customers do they have? How expensive are they and what do they offer? Which stores stand out in particular and why? If you write all of this down, you will get a much better competitive analysis than spending your days evaluating the latest statistics. And you will also learn a lot about your potential customers and what they want.
Sometimes a business plan is simply about writing the self-evident. Talking to a freelance graphic designer about “sales” or distribution may seem odd. But even a graphic designer has to sell his product to the customer, right?
We at SmartBusinessPlan provide you with real business plans from founders in very different industries. So you can see how others have done it. Our examples are neither perfect nor award-winning, but they have all worked. And that’s the point.
So there’s really no reason to stand in awe of a business plan. Anyone who has attended school can write a good business plan. You should know that you’re the experts. You’ve been busy starting your company and know almost everything about it. Now it’s only a question of arranging everything. And closing the gaps, if there are any.
What’s makes a good business plan?
No business plan is exactly the same as another—just as every business idea is different. Certain points should, however, always make an appearance. This is usually the beginning of a summary, in which you briefly describe what your business idea is. Then follow-up with chapters about your proposal (customer service, market & competition), the customer (target group, sales, and customer loyalty), the company (legal form, location) and about you, the founders (qualification, experience, if necessary).
Financial planning must, of course, not be lacking. This gives you the amount of revenue you’ll be able to make: along with what products or services, what costs will arise when the company will be profitable, how much liquidity is required and how much capital is required.
The focus you set in your business plan depends on your start-up project. The main thing is to keep the goal in mind: to describe all the pillars of your business idea and to show by means of key figures that it is economically feasible.
Small steps towards a big goal
What if the thoughts, ideas, and facts surrounding your start-up project form a massive knot in your head? Then step by step, you should unravel your idea and roll it up again. At SmartBusinessPlan, you will find a thread that will help you to systematically describe the business idea. For each chapter in our outline, we have formulated simple management questions, thus dividing the business plan project into manageable bite size pieces. If you answer the questions one by one, you almost automatically come to a coherent overall plan.
You can, of course, also make an outline yourself, and write down at each point what you think of it. Keywords are completely sufficient. First of all, it is only to find the structure of the business plan and to see what information you still lack. You can still formulate your thoughts later.
No place for seamen’s yarns: the financial part
Guess which part of your business plan will probably interest your investors the most? Okay, that was too easy, of course, it’s the numbers. Their job is to clearly show if you’re building a pipe dream or a stable company. It’s therefore advisable to pay particular attention to this part.
A typical trap that founders fall into is overreaching. They manipulate the numbers until there’s a plus before the final number. On the one hand, the underlying motivation is, of course, understandable, but on the other hand, it’s also a fairly certain method of going down in a very short time. Don’t be tempted to increase your sales when the turnover clearly shows that your company has been in the red for years.
Don’t go crazy
Start with the costs. In the beginning, it’s better to have a desk in a shared working space than a whole floor in a prime location. In the first year, you only have one part-time employee and no full-time employees. And if you increase your sales (which is always a good idea from an economic point of view), you should be able to justify this by taking appropriate measures, perhaps with an effective marketing campaign or a sales system that allows you to reach more customers.
Your numbers and business plan should, therefore, be mutually supportive. Your business idea can only work if you’re able to explain how you came to those figures in the business plan. For this purpose, it’s essential to check the underlying assumptions. Why would 30 people buy your product in the beginning, then after half a year have a projected increase to 130? Have you asked them?
My advice: Take the numbers part seriously but don’t go crazy, for your own sake. Being bogged down in the search for suitable financial planning tools on the Internet or brooding for days over an Excel sheet is not a good idea. SmartBusinessPlan offers you a customized wizard assistant to help you with points of sale, costs, profitability, liquidity and capital requirements. This guides founders step by step through their fear of numbers and helps with the financial planning.
Conclusion: Full force ahead thanks to Businessplan
I hope it’s clear from this blog post that a business plan can be much more than an annoying necessity but a good friend who keeps you from disappointment and tells you what to do in the confusing founding phase. Consider writing your plan as a creative adventure, at the end of which you are rewarded with a sound knowledge of the opportunities and risks of your start-up project.
A summary of our most important tips:
- Write your business plan for yourself, not for the bank. It is your action plan for the founding period.
- Be honest with yourself and don’t make something look better than it is.
- Don’t be scared of a blank page. Start with small steps.
- Don’t make things unnecessarily complicated. Usually, behind simple sounding terms, there are simple connections.
- Check and test every assumption: Where do your numbers come from?
- A good business plan isn’t made at your desk. Go out, look around and talk to your customers. This is better than any statistic!
Jan Evers is the co-founder of SmartBusinessPlan, a joint project of his consulting firm evers & jung and individee GmbH. The software solution helps small businesses and startups in business planning, forecasting, and budgeting for simple, well-founded business plans.