Preparing for business with ICAEW and X-Forces: Part 1
Part 1: The business plan
By Clive Lewis, ICAEW, in conjunction with X-Forces
A new series of articles – courtesy of X-Forces, in conjunction with theInstitute of Chartered Accountants in England and Wales(ICAEW) – aims to support potential entrepreneurs by answering some of the FAQs it receives from those either thinking of embarking on self-employment or scaling up and employing staff. If you’re a potential small business owner yourself, we hope you will find these short and to-the-point features a valuable addition to your own preparation. In this first instalment we explore the reasons why a business plan is so important when you are preparing to start a business …
Research and test your business idea
Before starting, you need to establish who and where are your competitors, and how your offer will compare in terms of price, content, convenience, and so on. You then need to develop a plan that shows how you will win customers – including a sales forecast by week or month for the first two years. Researching the market and your business proposition’s place in it will help improve your chances of success. It will also give you a better understanding of your target market and anticipated demand. It helps shape the decision to go ahead as well as clarifying issues such as where to locate premises, how much to spend on promotion and how much start-up finance will be required.
Will my business support me?
A business should provide you with a satisfactory income in exchange for the time you put into it. For example, you can reduce risk by beginning on a part-time basis or, if you are thinking of opening a shop, say, try hiring a stall at a market first. Before starting work on a full-time basis, you need to be as certain as you can be that the business will generate enough profit. This would usually involve preparing a business plan, which will not only help clarify your own vision but also convince others (such as the bank) that your business has a future.
Your business plan should answer some key questions, including:
- What is the cost of setting up the business?
- What is the anticipated trend in sales growth?
- How long will it be before the business breaks even?
- What cash flow or financing is required?
A business plan is also essential if you wish to raise finance!
Ready to go?
Register for X-Forces’ start-up and business planning support today at www.x-forces.com Help for businesses can be obtained from ICAEW’s Business Advice Service, in the form of a free, straightforward discussion with an ICAEW Chartered Accountant. Find out more at www.businessadviceservice.com