- Total posts: 6
Hi Killer Cruzer,
Your business idea sounds exciting.
Whoever suggested writing up a business plan is right on the money. This is true irrespective of whether your investing your own funds to launch the business, or are seeking to raise capital elsewhere.
Taking a disciplined approach to planning will require you to think about topics that aren’t necessarily in your field of expertise. I’m yet to meet anyone who is an expert at everything, so as you encounter gaps in your knowledge you will begin to get a list of areas where you need to investigate further.
There are a lot of generic templates businesses (whether new or expanding) use to formulate and document a business strategy. From that strategy you can then build out a detailed and articulate business plan. You have most likely heard of some of them such as SWOT (strengths, weaknesses, opportunities and threats) analysis, Competitor analysis, Customer and Market Analysis, Key Performance Indicators, Mission Statements, Ansoff Growth Models and on and on….
Here is a free Business Plan Template published by the Australian government that should be a useful start:
Whilst generic, templates such as these encourage you to answer the following key questions:
(a) What is your Unique Value Proposition (this is what will set your product or service apart from your competitors) and how will you best communicate that to potential customers?
(b) Who are your target customers, and how will you attract their business?
(c) What is your route to market? (retail / wholesale) Will you sell on-line or with a physical presence or both?
(d) What does your supply chain look like and are there any risks associated with it?
(e) Will you develop any intellectual property along the way that needs patent or trademark protection?
(f) Aside from yourself, who else might contribute resources to the running of the business, whether freely or in expectation of something in return.
Specifically, for you, your business plan should be very clear on every aspect of the product.
You’ll need to be able to answer detailed questions such as:
Who manufactures it and where, how much each component costs, what is the lead time from order to arrival, what are the minimum production runs, how many variants will you offer, how much inventory you need to hold to satisfy demand, do you need to carry spare part inventory, what currency do you pay each supplier in, what are the supplier payment terms, what warranty you need to supply your customers, will you offer any after-sales service, what (if any) warranty is available to you from suppliers, what engineering, design and safety testing standards apply, where does final assembly occur, shipping costs and shipping terms, product liability insurance…
The list seems exhausting but by no means is it exhaustive. But don’t worry – THAT’S A GOOD THING!
Remember if its hard for you to get this off the ground it will be just as hard for new competitors.
Finally, once you have formulated the strategy and built the business plan, you’ll want to prepare a Profit & Loss Statement, Balance Sheet and Cash Flow statement. Profit & Loss is a no brainer – you want to ensure there is a profit at some point for all your efforts, but the really important one is the Cash Flow because as they say ‘Cash is King” and it’s the only thing that will fund your payback on investment – and there is almost always a difference between Profit & Cash Flow and getting to understand the drivers of this earlier than later is the most sage advice I can give.
If it was my plan, I’d build out at least three financial scenarios (Good / Average / Bad) and for each scenario war-game what the appropriate response would be.
Hope that answers your question. Good luck with it!!!