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Help with business plan?

Discussion in 'Business Planning' started by iVirtUK, Feb 17, 2014.

  1.  
    iVirtUK

    iVirtUK Applicant

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    Hello guys,
    I have started making a business plan for my idea using some online software, and to be honest, its not looking too great.

    I am also a little stuck, I am struggling to understand all this sales forecasting stuff. My idea has never been done before, and I am only in the planning stages of my business, so how on earth am I supposed to know what sales I will get?

    Can someone please point me somewhere I can get information on how to make a good business plan specifically for start ups?

    I am trying to get funding for my business and having an informative and professional business plan is vital.

    All help will be much appreciated.
     
  2.  
    iVirtUK

    iVirtUK Applicant

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    Anyone?
     
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    Paul Norman

    Paul Norman Businessman

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    Writing a business plan is much, much more than filling out a spreadsheet, either for yourself, or for your bank.

    It is an opportunity to sit down and plan the actions you will take, and the likely financial outcome of those actions.

    For example, as you have stated, you do not know how many sales you will get. But you can choose which selling actions you will carry out, and you can estimate the believable outcome to those actions - that becomes your business plan. You have to do likewise with your business costs.

    Different people approach the task in different ways, but my take on it is that a business plan starts with the stuff you will actually do - your actions - otherwise it is a dream on Excel.
     
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    Duncan

    Duncan Moderator Staff Member Premium Member

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    How many people will buy your idea/app? How much do you think they will pay? Multiply the answers to the two questions and that is 'Sales'. I know it is a guess but if you prefer you can tell me your idea, i will guess and charge you a fee for guessing! I will call it market research to make you feel better about paying me ;o).
     
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    faradaykeynes

    faradaykeynes Applicant

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    TST1

    TST1 Graduate

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    Sales forecasting for a product or business that doesn't currently exist is incredibly tricky however a mixture of initial customer validation and a bit of "copying" will be enough to get an idea.

    Firstly you need to speak directly to potential customers or at least your ideal customer, get an idea if there is an actual need for the product or even a desire for it. During this process use a number that you think sounds about right that you want to charge for the product - ask the customer if they would be happy to pay that, if not ask why (always dig as deep as you can during customer validation).

    Whilst that idea is very spray and prey the outcome of it should that you understand your potential customer better than before - which helps to align the cost of the product to the customers wallet.

    Secondly using the "copying" method simple search for something that has even a fraction of a similarity, with that you can begin your process of digging deeper into the financials and understanding how that company works.

    Again both ideas are never going to deliver an exact figure but that's the wonders of forecasting, if you can back it up with real customer validation and similar business models than that's all you really need.

    If you look for investors or a loan please don't start evaluating your company at stupid prices, modesty is key here. Jeff Bezo's initial sales forecast of $5 million ended up being off by about $4 million - everyone struggles with sales forecasting.
     
    Duncan likes this.
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    Better Business Finance

    Better Business Finance Applicant

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    Hi there

    It's great that you are in a position to start thinking about a business plan. In short, a business plan describes where your business is now, your aims for the future, and how you expect to achieve them. In addition to obtaining finance, a good business plan can also help you to remain clear about your strengths, weaknesses, targets and performance.

    Below are the points that your business plan should include:

    1. Business overview

    Begin with the aims and objectives of your business, where the idea came from and why you think it will work. Summarise the highlights from each section of your plan, with a focus on your competitive advantage, profit and cash flow forecasts, how much money you need and the prospects for investors.

    2. Legal status and key personnel

    Next, confirm the structure of your business. Will it be a partnership, a limited company or a sole trader? Describe your experience; introduce other key personnel, and whether or not you intend to take on additional employees.

    3. Details of your products and/or services

    Now add a few more details about what your business does. If relevant, explain how products will be developed and any patents, trademarks or design rights you hold.

    4. Your target market

    Describe the size and characteristics of your target market. Show how your product meets customer needs and back up your assertions with research.

    5. Your unique selling point (USP)

    Highlight the strengths and weaknesses of the competition and show how your product or service stands out.

    6. Marketing your business

    Detail your pricing, margins, promotion and positioning, as well as how you plan to reach your customers e.g. advertising, PR and e-commerce.

    7. How and where your business will operate

    Describe the location of your premises and the benefits it offers in terms of cost, transport, distribution etc.

    8. Your financial requirements

    Hope this is helpful and good luck with it!
     
  8.  
    Tradepage.co

    Tradepage.co Applicant

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    Sales forecasting is usually best served within a cash flow forecast, which is an effective tool to highlight problematic cash balance situations and prevent insolvency, as much as to estimate company sales amounts and implement targets.

    You mentioned that you are looking to introduce something that has never been done before. Some useful starting points involve analysis of the market sector/s your product could fall into and observing similarities and contrasts in any associated products to help in identifying a range of suitable retail prices.

    The emphasis here is on the word range, as this type of forecasting exercise should allow for flexibility in pricing, sales quantities and associated costs to help gain an understanding on multiple levels of the viability and risks involved in operating at various production levels. By understanding the range of forecast scenarios you could then decide upon the ideal data set that represents the sales forecast figures you wish to initially work with. Be prepared however, to visit this forecast on a regular basis to ensure it is inline with your actual performance when trading.
     
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    Energise Accounting

    Energise Accounting Applicant

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    you are best to get an Accountant to do this for you. plus it would also be a good idea if they can help with finance for startups
     
    jeffnev likes this.
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    Picklance

    Picklance Freshman

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    Hi... on Picklance we have some MBA student who will be more than happy (and competent) to provide you with the expertise and skills you need, without straining your financials

    One project successfully completed helped one of our first Client to get almost £15,000 grant! ;)

    Writing a business plan by your own may me quite daunting if it is not your area!
     
  11.  
    mcsun

    mcsun Applicant

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    Hello iVertUK,

    Links removed

    We have helped a number of businesses with business plans to get funding. We are also serving in the panel of a number of start up funding organisations. Wish you good luck...Sunny
     
    Last edited by a moderator: Nov 19, 2014
  12.  
    Edge

    Edge Trainee Lab Tech

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    Creating a viable business plan is incredibly difficult and I suggest you get an experienced professional to sit down with you and go over it with you. Here's a couple of things I have learnt along the way:

    Start at the End
    Presumably you will have some ultimate aim for your business and an exit strategy, unless you plan to carry on until you fall over and die. For me, I just want to sell my business and get out as soon as I can to be honest. So I've had to research what makes a business sellable and who might buy it. This tells me what I want to be and roughly when. I then work backwards to look at what is required to get me there.

    Mission Statement
    What is your mission? Yes, we know it's to make money of course. But wait. That is from your point of view. What do customers want? Build a mission, philosophy and values from a customer point of view.

    Strategy
    What's your overall strategy? It should follow on from your mission statement and actually shouldn't be that specific.

    Goals
    Set SMART goals i.e. specific, measurable, achievable, realistic and with a timescale. plan the resources required to achieve those goals.

    Access business training

    There is often funding available for training. I've just recently been on a University of Liverpool Business Development Training course which has been transformational - it was ERDF funded so for a year's worth I paid a token £250. The main thing is having a regular review of what you are doing involving other professionals.

    At this point can I just say there are zillion so called business coaches out there and many of them have no track record and are just good at selling themselves. What you actually need is someone who has done something not too dissimilar to what you are setting out to do. I would question the usefulness of someone who has spent most of their working life at the top level of a PLC. They have little idea of what it takes to build a business from scratch - not saying they would be completely useless as a second pair of eyes is always helpful.

    Cash Flow Forecast
    Usually pie in the sky unless you have sold something similar or have carried out market research but at the very least you are starting with something which you can review after 6 or 12 months. Get your accountant involved.
     
    jeffnev and ISS like this.
  13.  
    ISS

    ISS Son of Victor Meldrew Premium Member

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    Great post by Edge apart from the first line.

    "An experienced professional" in my experience is someone with absolutely no bloody knowledge of running a business. At best they did a three day course.....
     
  14.  
    Edge

    Edge Trainee Lab Tech

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    Thanks for the compliment!
    What I meant by experienced professional, is someone who has been through it all before, survived and has a logical approach to problems.
     
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    ISS

    ISS Son of Victor Meldrew Premium Member

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    Ahh well in that case I agree with you totally Edge, you even covered my point in your penultimate paragraph!

    Business coaches- - yeah right. The vast majority cringe when you ask them what relevant experience they have in order to be able to give the advice they give.
     
  16.  
    Edge

    Edge Trainee Lab Tech

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    I think there is something in all of us that wants to advise others on what to do and some people try and turn that into a living regardless of their track record. I'm guilty of opining myself - the difference is I wouldn't charge for it.
     
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    Market Evaluator

    Market Evaluator Applicant

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    There's a lot of good advice above, and there's no single way to do it.

    But its worth noting that 'entreprenuer' really means "someone who plans" (prenuer) "the entry of novelty" (entre) "into the market place"

    so, its not uncommon to be in the OPs position... Your cash flow projection is a series of estimates, the business plan is a the description about what you know to inform your estimates

    for me, cash flow is the last of 5 critical areas I look at, particulaly when you have no track-record or your product is creating a new market place, but ultimately preparing your business plan and cash flow forecast is an iterative process of discovery, you should be going back through each element, trying to improve it through clarity and coverage

    5 critical areas where your business plan should excel at if you have no track record

    simple value proposition
    make it clear what market problem your business idea solves

    while its not impossible that market doesn't know the problems exists yet, its improbable... if you saw the problem it should be visible to others, you can solve this by trying to define what the problem is in a way that your prospective customer would understand and how your idea is a solution to this problem..
    .

    example: when Branson started Virigin Records as a mail order business, he understood that suplliers couldn't get a full range into a shop's limited display area and that music buyers had an appetite for wider range of music and would value being able to order/recieve the products at home

    robust busines model
    it should be clear how your business converts value into cash
    once you have an idea of your value proposition, you can look at the business model as a conversion process - you're exchange your value proposition for cash

    example: Branson converted the value (for both suppliers and buyers) by extending range and reducing fulfilment costs, taking a proportion of the saving as his profit

    quantified market research
    market analysis who are your ideal customers, what do they look like, how many of them are there, where are they, how do they buy, which businesses already supply this marketplace, how does this market segment into identifiable target groups

    example: Branson knew there was an increasing number of young, lower middle-class music buyers who increasingly getting their own, personal record players in their bedrooms and had access to pocket money

    market testing what have you done to understand the reponse from customers to your business idea, how many did you ask, how did you find them, what did you ask them, what did they say, how did this shape your current offer

    example: Branson knew many people like this both from his school days and on the London hip scene,

    marketing & sales plan
    How will you let your market segments know about your product/service, how will it be sold/fulfilled, what kind of payment models will you use, what prices do you think your customers will buy at, what offers/discounts should be in place and when, how will you get them to buy again

    Example: Branson had to get his catlogue out to customers, his order form in the catlogue had to be clear about taking "postal orders" (a form of gurateed cash payment), he had to know what the costs was of p+p for 1 record or 5, what discounts he could offer (and who was discounting, was it him or the supplier)

    well researched cash-flow projection
    how are you going to spend your investor's cash, what are the fixed costs, what costs are variable, how much does it cost to acquire customers, how much margin do you make on each sale, how much do you have to sell to break even, when is the break even point, what are the medium term views on profit, what are the risks to profit, when will the investor get cash back from the business

    At this point you can go back through your research to start to make your estimates. I take a parallel approarch at this stage, I'm both making the spreadsheet and writing it as a narrative, which explains the estimation process


    Best of luck.
     
  18.  
    CoffeeBeans13

    CoffeeBeans13 Graduate

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    Some great tips here! I'll be using some of those when doing my next plan, after I've figured out my time management!
     
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    aubreys

    aubreys Applicant

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    Business plans are inherently strategic. You start here, today, with certain resources and abilities. You want to get to a there, a point in the future (usually three to five years out) at which time your business will have a different set of resources and abilities as well as greater profitability and increased assets. Your plan shows how you will get from here to there.

    Rapid Envelopes
     
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    loyaanderson

    loyaanderson Applicant

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