A business plan that works normally considers practical aspects of running a business and the business operating environment. Most plans are theoretical and assume wrong things and are just templates with no link to reality. A true business plan must be done by someone who understands how business works and the things that are needed to survive in the industry. Putting too much theory is a waste of time and will not get the business very far.
1. Understand contribution of products to Fixed Costs
Don’t just sell products without understanding how they will contribute to your rent, your fixed costs and the salaries that are required. If I run a business which will have a rental of $500, salaries of $2,000 and any other fixed costs of $500, then how many products should I sell to survive. So let us say your cost of goods is $10 per unit of item to be sold then you sell your goods at $15 as selling price per unit item, meaning that you have $5 which must cover your fixed costs. So in this case we say your fixed costs are $3,000 which is (500+2000+500). So the question is how many goods must I sell to meet my basic fixed costs. In simple terms you need to sell 600 products (i.e. 3000/5). Now that is a real business plan revenue budget which considers the number of products that need to be sold.
2. A true Business Plan segments the market
Whether we admit or not, marketing is everything that a business must be. You cannot sell your products without understanding the profile of the person that you are selling to. Knowing the profile of the person whom you expect to be your client will help to estimate the number of clients that you can expect to sell to. For example, for an uptown salon to make money it would require that a sizable and consistent affluent market be in existence. If a neighborhood exists which has 10,000 people who can afford a manicure of $40, then your chances or succeeding in business where you only need 500 clients a month is very high.
This is a world full of different risks from different aspects. A good business plan needs to consider how particular areas will be tackled. At least consider your top ten risks and have mitigation strategies which are practical and enable the business to flourish. Some of the more practical risks include
- Revenue accountability, failing to account for money that comes into the business
- Failure to satisfy customer needs by not proving a good service.
4. Structure the business to be efficient and meet its objectives
Too many people get carried away with titles and functions such that they forget that for the business to succeed it is a function of meeting the client’s need. When you structure the business, think of the client in mind, you should ask yourself a few questions as the ones shown below
- What are the expectations of my clients and is my business structure set up to provide the best service possible?
- Do I have the right skill in place to meet the client needs?
Knowing the right questions is critical to being able to create the right structure for the business. Business is only as successful as the number of repeat clients that come through the business door. What you are looking for are repeat clients as well as new clients, the same thing applies to online websites,
For practical reviews of your business plan please do get in touch here and we will review and assess your business plan