Whether you intend to remain a one-person business or take on employees in the future, starting your own company is an exciting journey. You’re choosing to be your own boss, meaning you have the freedom and flexibility to work when and how you want and determine your own business goals.
To make sure that your business is heading in the right direction, its important you lay out a business plan so that you can focus on your targets, ensuring every new assignment you undertake is moving you closer to your goals.
What is a business plan?
Your business plan should be a document that sets out your company’s future, helping you to visualise the steps you need to take to get from where you are today to where you want to be in the future – whether that’s one, three or five years’ time.
As a small company, the aim for your business plan is ultimately to help your focus your efforts and energy. Your plan does not have to be a 50 page document with a lot of detailed description, but a useful tool you can use as a map and compass as your business develops.
Before you begin, ask yourself the following questions:
- What is your mission statement?
- What are your objectives for development?
- What is your overall goal for the next one, three, five years?
Remember, your business plan is not set in stone, and you have the flexibility to change it over time –this is one of the core benefits of being your own boss and running your own company. The process of writing and reviewing your business plan will help you get the best out of working for yourself.
How can a business plan help?
Establish long-term goals
When running your own limited company, it’s easy to get swept up in the issues of the day instead of stepping back and organising your priorities around your long-term business objectives. While today’s to-do list may seem vitally important now, the key to progressing your business is ensuring that you’ve got clear priorities so that every day your short-term tasks are advancing your company.
“It takes as much energy to wish as it does to plan. ~ Eleanor Roosevelt
Choose appropriate assignments
It is easy to find yourself pulled in multiple directions when working as a freelancer because there is always a temptation to choose the opportunity that offers the greatest financial gain. But you may find that the role that would give you the most capital now could lead you away from your business objectives.
One benefit of setting out a business plan for your limited company or freelancing business, is that you can return to it when considering potential business propositions. This will help you work towards your goals by ensuring that your time is only invested in activities that are going to drive your business forward.
Plus, if you’re ever looking for investors in the future, a business plan is invaluable when trying to articulate what your business means and where you want it to go.
How do you write a business plan?
Once you’ve figured out where you are in comparison to where you would like to be, your business plan needs to lay out your marketing, financial, and operational strategies.
What are the essential elements you should include in your business plan?
This business plan is essentially your plan of action. Anyone looking at your business plan should be able to understand what your business does, where you want it to go, how it will make money, what you will do to achieve your goals, and why you will succeed over your competitors.
It should incorporate the following sections:
Executive summary – summarise the main mission of your business, including a short summary of your business concept, a description of your competitive advantages, and a brief explanation of what stage of development you’re in.
Your background – think about your motivation behind your business – where you’re going and why. Consider questions like why you want to run your own business, and how and why you’re passionate about this. In this section you could also note any training courses you may want to attend in the future to better yourself and improve your product/services.
Products and services – this is your opportunity to drill down into the core of your business: the product or service that you’re selling. Define exactly what your product/service is, why customers should purchase from you over your competitors, and why your service/product stands out in the market. Decide how you aim to sell your service and your pricing strategy. There is also room in this section to think about any potential problems that could arise with your product/service and brainstorm ways to mitigate prospective issues.
Marketing – this is key in keeping you on track with business growth. It is important that you understand your target market and how you are going to attract them. Of course, how you promote your business will differ depending on your business, for example, if you are a shop, perhaps you want to advertise with flyers on local noticeboards, whereas as an IT Contractor you may need to consider investing some serious time into your LinkedIn profile and building connections of prospective clients.
Legal requirements – while running your own business is exciting, it is important to understand the required administrative responsibilities. In this section, you should keep a record of details such as your business insurance, tax rates, and if you have employees, employment laws and pension schemes.
Financial plan – being on top of your finances is crucial for your success. You must keep a detailed record of any setup fees, earnings and outgoings. In this section, you should also consider the cost for each product/service, your cashflow, your profit margin and your financial forecasts for the next 12 months. It is also beneficial for you to complete an annual balance sheet, detailing your assets, liabilities, and equity.
While all of this may sound stressful, setting out on your own and outlining how you want to drive your business forward can be exhilarating, a chance for you to bring your ideas to life. And, if you have any questions, at Clever Accounts we will always give you the best possible advice. So, get in touch with us for guidance that is tailored to you, your business model, and your finances.