The essentials to consider when developing your business concept
Clarify your idea so you can simply explain it
Understanding your proposed customer is critical
Don’t underestimate the cost of marketing
Assess the risks and find ways to plug the gaps in your knowledge
You’ve had a great idea for a startup or new business. Now you need to make sure it all makes sense and create a document that shows how and why your business will succeed.
Every company is unique and this will be reflected in its business plan. The steps below can be tailored to your requirements but should ensure the key elements are all included.
Step 1. Set out your stall
You may be clear about what will make your new business great, but you need to be able to communicate that to investors, customers and other stakeholders. An effective business plan will often start with a clear statement about what the business will do, and what product or service it will sell.
Step 2. Set clear goals
Do you want to takeover the world or just a small corner of it? Is creativity, social impact or innovation more important than maximum profit? Decide on the business, financial and even personal goals you want to achieve in the short and medium term.
Step 3. Explain your product
Describe what your product or service will be, and what makes it unique or different. What are its limitations or downsides? How will you make, develop or source it?
Step 4. Introduce your customer and market
Who is your target customer and how big is your potential market? The better you understand the customer, the more likely you will create something they will buy. Market research is critical. Consider how you could test the market and assess demand with a Minimal Viable Product.
Step 5. Explain your sales and marketing approach
How will you make potential customers aware of your product or service? Marketing and advertising costs are often underestimated, especially in a crowded market with a lot of competition customers. Will you have time to do the marketing yourself or will you need to hire staff or outsource tasks?
Step 6. Consider variable costs
These are the costs associated with the product or service itself, including manufacture, storage and delivery. For a digital business this could include development and testing.
Step 7. Estimate fixed costs
There will also be fixed costs that you will need to pay no matter how much you sell. These could include salaries and wages, National Insurance, tax, office costs, accountant’s fees, bad debts, interest payments and rates.
Step 8. Work out your pricing
Take the cost of the product or service away from the sales price and you have your gross profit. Subtract your overhead costs for the relevant time period and you’ll start to have an idea of how much you’ll need to sell to make a profit. There are various pricing models and you may need to experiment to find the right one for your business.
Step 9. Evaluate the competition
Identify other businesses that could compete for customers. Make a list of factors related to their product or service – everything from cost and service level to features and reputation. Assess your idea against the competition to spot risks and opportunities.
Step 10. Crunch the numbers
Financial calculations and forecasts are at the heart of a business plan. They could include capital requirements, profit and loss forecasts, cashflow forecasts, required assets and funding requirements. How much startup capital do you need and what runway will that give you before more investment or revenue is required?
Step 11. Decide on a legal structure and business organisation
Will you be a sole trader, limited company or set up a business partnership, perhaps with a co-founder? Do you need staff and will they be offered any equity? What access to advice and expertise do you have – and what will you need to pay for?
Step 12. Assess the risks
With so much disruption and uncertainty it has never been more important to assess the risks your business may face. Be honest about gaps in the founders’ knowledge or experience and look to fill them. Work out contingency plans and stress-test your assumptions.
Step 13. Iterate your approach
A business plan should be an evolving document that reflects what you are learning and the data and insight that is being collected. The sections may need to be adapted or added to, depending on the nature of the business, its sales model and type of funding.
Step 14. Talk to Eagle Labs
The Ecosystem Managers at Eagle Labs are used to working with founders and entrepreneurs at the start of their business journey. They can advise you on approaches, considerations and next steps. Find your nearest Eagle Lab here.
Step 15. Find a business plan template to suit your needs
There are numerous business plan templates online with some specifically tailored for startups. No two are the same, so it pays to search widely and borrow from multiple sources to create the business plan that best fits your circumstances and concept.