You have to be a dreamer to be an entrepreneur but it’s no good staring up at the clouds and waiting for the first million pounds to just drop into your lap. Once the dreaming is over, the hard work starts and the first step for any would-be entrepreneur is a business plan. Entrepreneur coach Dawn Z Bournand, founder of Fabulously Successful and the Paris Women of Success group believes a solid business plan is the key to a winning business. Here she shares her fool-proof tips for success to help your startup get the head start it needs.
Map It Out
"A business plan is like a map. If you plan a trip but you don’t sit down and figure out where you want to go and how you want to get there, it can take much longer to reach your desired destination, if you ever get there at all. Many would-be entrepreneurs have a dream of owning their own company but never define what they want that business to become in one, three or five years’ time. Formulating a business plan is an extremely important step because it helps you get clear on what you want for you and your company’s future. You need to create a plan around the vision you have today and then sprinkle it with a healthy dose of flexibility and room for opportunity."
Don’t Fly With Blinders
"If you decide that you don’t have the time, energy or desire to set up a business plan around your fabulously lucrative idea, chances are you are setting yourself up for bankruptcy. It’s great to have a fly by the seat of your pants attitude but if you are doing that without a plan then you might as well be flying with blinders or even double eye patches.Make sure your idea is actually a solid one with the potential to be profit-making and back this up by pulling facts, figures, ideas and stats together to support what you would like to accomplish.
This is also a good initiation to see how much you are really willing to put in to make this business happen. If you don’t have the time or inclination to create the basic building plan, how can you expect to have what it takes to get through the inevitable tough spots and stumbling blocks of a new entrepreneurial endeavor?"
Business or a Hobby?
"Next comes market research to prove there is truly a market for your idea. I’m not talking fancy high-end marketing agency kind of research. You can simply make a start by asking friends, family, social media buddies, or business colleagues. And have you seen first-hand that there’s a need or a gap in the market for your idea? Great, but even that will require some solid numbers behind it if you’re planning on getting outside funding. Make sure that your idea can truly make money otherwise it is simply a hobby. Nothing wrong with hobbies but if you want a real business then it’s going to need to make money and even more importantly it is going to need to make a profit."
Curb Your Budget Enthusiasm
"You then need to begin creating calculations on just how much money can be made. Because business plans are often shared with potential business investors, there is a tendency to make the picture look as rosy as possible. The problem is that if you’re too optimistic with your calculations you could be setting yourself up for a very rude awakening.
It’s important to remain passionate, motivated and upbeat about your endeavor but you must also keep your feet on the ground and look at the reality rather than get too dreamy when you’re creating your official plan. For example if you think that you could sell 100 widgets a day and your research and production plans show that you can reasonably only make 50 a day then it’s pretty obvious that all the optimism in the world is not going to turn 50 into 100. However, it could be an opening for opportunity – if it’s simply a question of more manpower or production space then you might be able to work this into your future plans."
"Investors and bankers have a vocabulary all of their own so it might help to look at some of the terms that you might come up against so you not only speak their language but also to have the answers they are seeking at hand.
For example, the term ‘turnover’ has two very different meanings depending on whether you are speaking in British or American English. The American sense pertains to employee turnover – the rate at which you gain and lose staff. In the American sense a high turnover is quite negative as most people want to keep their employees for a fairly long period of time to establish company loyalty and keep down training costs. Whereas a high turnover in the British sense is positive because it means the amount of money the company actually makes (generating sales revenue). In order to avoid pitfalls like this it’s better to refer to your potential income in terms of Gross Profit and Net Profit."
Create a Strong Net
"A colleague of mine was celebrated a few years back for building her consulting business into a million dollar company. To make this example easy, let’s just say she brought in exactly one million dollars, which would be classed as her Gross Profit. This is the amount of money her company brought in through consulting sales and services.
But she found this frustrating because even if though it looked as if she was a seven figure success story, the amount of money it was taking to run her company was leaving her at the very low six figure mark. In other words her Net Profit was only $100,000. Now that may still sound like a very successful business but for this lady being a millionaire did not feel at all like she had expected. The happy ending though is that she learned a lot from that experience and she streamlined her operations and expenses radically. Her net profits are no longer only 10% of her gross profits!
Now this example didn’t take into account the cost of tax to name a few things so you should consider investing in a consultation with a certified accountant to get clear on all of your business expenses. An accountant can help point out things you may not have even been aware of and can also help you to see benefits and advantages that you may have overlooked otherwise. It’s also wise to get your basic business expenses on some sort of spreadsheet. Since Excel is the best known for this and the easiest to access, I would suggest starting with that. Then as your business begins to take shape and you start to work regularly with an accountant, you may want to use a more sophisticated accounting system."
Whizz Bang Versus KISS
"When it comes to presenting your business plan, there are many presentation applications available to take it to cinema-style entertainment level but most of the people you’ll be showing your business plan to are much more interested in the dollars, pounds or euros of it, than any whizz bang PowerPoint presentation. And keep this business motto in mind too: “A confused mind never buys”. If you dazzle your audience with flying headers and dancing dollar signs but they can’t see the solid figures in the mix, chances are they will say ‘no’ even if they did like your creative imagination. My best advice is always KISS (Keep It Simple Sweetheart)."
Tailor Your Business CV
"If you’ve ever applied for a job, you’ll know that everyone tailors their CV to the individual employer. Well, you can also do this with your business plan where you can tweak certain things depending on who your audience is. For example with your banker you’ll want to underline the expected profit and the necessary capital to get things going, but for your personal business plan you may want to focus more on the possibilities, the amount of time you will need to dedicate to the business and the level of satisfaction you will get from carrying this business idea through to fruition.
One important thing to keep in mind, you may think that investors are going to be wowed by the coolness and originality of your idea but in fact investors are there for one thing – to make money. So, though it is not at all a bad move to speak about how unique your product or service will be, in the end the only sound an investor wants to hear is the sound of a cash register ringing. If a potential investor does not see the possibility of a solid return on his investment, he will decline the opportunity you are presenting. Therefore, at all times keep the focus on profit, growth and solid expansion for your business when you speak with investors."
Keep The Faith
"If all of this talk of business plans is making your head spin, don’t worry. If you are starting out as a solopreneur you may not even need to show your business plan to potential investors at first. In many cases, a classic one page business plan will be sufficient enough to iron out any wrinkles in your idea but you do need to be careful that you cover all of your bases and take into account each element of your new venture.
It is also very beneficial to show your business plan to someone else and if possible someone who has a bit of experience with business plans so they can give you an outsider’s perspective. It can be hard to see the whole vision of a company when you are standing in the middle of it. Therefore seek out another opinion or two while always remaining faithful to your vision of how you want your business to ultimately look. That vision may change but it’s essential you don’t lose sight of the passion that drove you to create your business in the first place.
Last but not least, remember that life is full of bumps, and turns and blind spots so the most important thing you can do as a new entrepreneur is to move forward in faith. Trust in what you’re doing and know that mistakes are really just learning curves to move you forward on the path to entrepreneurship. To paraphrase Dr Martin Luther King Jr - faith is taking the first step even when you don't see the whole staircase."
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