10 Top Tips How To Write a Business Plan
March 1, 2021 - March 1, 2021
One of the most frequently asked questions at FashionCapital is ‘How do I write a Business Plan?’ Many people, designers in particular, want to start their own label but just don’t know where to begin. The problem is time. When you start your business of you have to be the font of all knowledge and multitask continuously. If you sat down and thought about the plan rationally you would know exactly what to write but…you need to give yourself and the plan some time.
While a well-structured plan can make you focus on the business don’t forget that important element of drive, perseverance and personality. You will have real highs and black dark lows. You have to have the strength of personality to enjoy the highs (rationally) and tackle the downs and while it’s great having a beautifully presented and state of the art business plan it does not equate to success.
Here is a quick ten-step guide to what you will need in your company’s business plan:
1 An Executive Summary
This is a difficult starting point but it has to be done. The summary also includes a mission statement and an overview of goals and objectives. The executive summary introduces your business strategy and any bank or financier will review this section carefully. This summary is also important for your staff and potential clients.
2 Company Overview
This is a brief account of how the company began. Clearly explain the origins behind the company’s creation and how you came up with the idea to start the business. Remember financiers are looking at you and your motivation behind the business and will gauge the calculated risk behind the investment.
3 Your company’s goals
Explain in a few paragraphs your short, medium and long term goals for the company. You need to indicate the growth rates you expect (be realistic here!) and outline how you will be able to expand and grow with the increase in sales. Also explain what you will do if you fall upon hard times – what are your survival strategies.
4 Biographies of the management team
This is always a good one! Financiers don’t always expect a biography on your staff or the subcontracted personnel you can draw upon. It shows how you have carefully researched your business and how you can expand or decrease. A business is only as good as the people it employs! The section should include the names and backgrounds of the team and their respective areas of responsibilities.
5 What is your offer?
What makes your service or product different from the rest of the market? What’s your specific Unique Selling Proposition (USP)? In the creative fashion world I have always found it to be beneficial to show the potential product either graphically, with line drawings and photographs or even taking a few samples along to a business meeting with banks. Show you care and love your products and remember at the end of the day this is what the customers will be buying. Sell your concept to the financier! A lookbook and press book are also useful especially if a designer is going alone or had a previous business.
6 A marketing strategy
How do you plan to tell the world you’re open for business? Will you create brochures, press releases; advertise in print, television or on the web and social media? Will you employ a PR agency? Will you need the services of an agent? Will you use online marketing tools to get your company listed on search engines? In the fashion world market access is important at the right level. Make sure you conduct your research well.
7 What is the market potential for your business?
Remember that you’ve got to convince financiers, employees, clients etc that the market you’re targeting is relatively large and growing. You’ll need to conduct some market research and in the fashion and retail sectors Mintel reports are key. The British Library has a host of such information. If you are targeting specific retailers then you need to review your potential competitors and conduct a directional and comparative shop. Establish where your product is and where you would like it to be. A SWOT (strengths, weaknesses, opportunities and threats) analysis is normally undertaken here but keep it simple with just bullet points. I have seen some SWOT analysis’ that are incredibly complex and actually it is also off putting – it can ask the question does this person get too bogged down in detail and miss the wood for the trees! If it is a web-based business ensure you surf the net regularly and keep an eye on competitor sites and volumes of traffic.
8 A three- to five-year financial projection
This section should include a summary of your financial forecasts, with spreadsheets showing the calculations you use to reach your projections. You’ll need balance sheets, income statements and cash-flow forecasts for the entire forecast period. The summary in this section is also where you would tell prospective financiers how much money you’d like to borrow to cover your start-up and on-going costs. Be under no illusions here! The assumptions that you make in this section will make or break your company’s success with the potential financier. If you’re unsure about using text book theory during this section then employee someone who knows what they are doing! It will be money well invested.
9 An exit strategy
Often overlooked as no budding entrepreneur likes to think they are going to fail but it is a necessity. The plan will include the benchmarks you will be using to decide if the business is going to fail and it’s not just about sales figures, profit margins and overheads. Sometimes market forces are such that the closing of a business is inevitable.
Add in your additional information that supports you plan. This should also include your product review and any press and PR coverage, lookbooks etc. Market research in the main text of a Business Plan can pad out a report unnecessarily. Far better to keep the main body succinct as possible and a light read. All the additional bumf, albeit important, needs to be kept to the right place! You could also add in the latest newspaper articles and features that support your business plan too.