2 Developing a business plan

Many freelancers start their business without a fully thought through business plan and this doesn’t cause them any problems, particularly if they don’t need to look for external investment. However, without that more holistic perspective of your business or creative idea, it can be more difficult to progress and grow.

Lesonsky (2018) suggests the following reasons why having a business plan is a good idea:

1. You’ll have to think through all aspects of your start-up – creative people are often full of ideas and excited about doing something new, but less keen on the practical elements of freelancing such as marketing and finance. Writing a business plan will force you to focus on the aspects that may interest you the least and it will give you a blueprint for success.

   Note: you will often have to send a version of your business plan to funders to demonstrate the validity of your concept or idea.

2. You’ll spot problems ahead of time – uncovering potential problems during the planning phase will help you to avoid those obstacles once you’re up and running.

3. You’ll be ready for anything – if someone unexpectedly offers to invest in your business, you’ll have a plan ready to hand over rather than having to stall them while you quickly write one.

4. You’ll be able to explain your idea better – if you’re trying to convince a potential partner or supplier of the merits of your business, showing them your business plan can be easier than trying to explain it to them.

5. You’ve got a lot of help – there is plenty of support available, both online and in person (see Week 3). You can even download template business plans to fill in.

Watch Video 2 from Business Wales to see what a business plan should include.

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Transcript: Video 2

NARRATOR:

Starting a business? Then you'll need a plan, a roadmap, taking you on the strictest and fastest route to where you want to go. Your business plan will include six sections and will help you think through your business idea, making sure you've covered all the angles and eventualities before you set off.

The first section is the executive summary, presenting an overview of your business. This section is vital as many investors make judgments about your business based on it alone. A great tip is to leave this section and until last to write. Once you've written the others, you'll find it easier to do as it will be a summary of the key points you make in other sections.

So start with your business details. Provide a short description of who you are, what you plan to sell, why, and to whom. Include the location of your business. Identify key employees and any other qualities that make your business stand out

Now into to your marketing and sales strategy. Show that you've done your homework, that you understand your target market. Outline why you think people will buy what you want to sell and detail how you plan to sell to them.

Then add in your management team and personnel. People reading your plan need to believe and have trust in the management of your business. So outline your credentials and the people you plan to recruit.

Then detail your setup, explaining what facilities the business will have, from your premises to your management information systems and IT. And explain how it will deliver the product or service to the customer.

Lastly, list your financial plan and projections. This part translates everything you've said in the previous sections into numbers. It will tell you whether the business will be worthwhile or whether you're wasting your time and/or money. Your business plan will change as your business grows. It will help keep you focused so you'll know where you are and where you're supposed to be so that you can correct your course as needed.

Here are our five top tips. Keep it brief. If it takes too long to write, it'll take too long to read. Get rid of the fluff. Cut the waffle and just get to the point.

Be realistic, be honest, and note all the challenges facing your business. Use visuals. Graphs, charts, and images can help bring your idea to life. And be creative so that your business stands out and grabs attention.

End transcript: Video 2

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Video 2

Which top tip is the most memorable for you? It will probably highlight a strength or a weakness – such as your creative design skills (‘Use visuals!’) or tendency to write too much (‘Get to the point!’).

If you like the idea of creating a more detailed business plan, there are many resources available. See the Further research section for a link to templates and financial tables from the Prince’s Trust. They are a useful starting point as they are aimed at young people with limited business experience and so use more straightforward language.

If you don’t need a business plan to win over investors, then you might find a less formal, shorter version useful. Some businesses prefer to call it a development plan. This can also be a useful tool in understanding the trajectory and growth of your work.

In fact, many business owners have two versions – a formal, but positive plan to share with outsiders, and a more detailed plan for your own use – open about areas of risk and issues to address.

Seminega (2015) suggests the following headings for a one-page business plan:

• Business overview – short and to the point, a summary of your purpose and vision.
• Target customers and ideal clients – who will actually buy what you sell? Demonstrate the need for it.
• Competition and competitive advantage – who are your competitors and why is your idea better or different from theirs? What are the opportunities that their failings bring you?
• Human resources – only include if you are employing staff or collaborating with other freelancers.
• Marketing plan – how will you communicate with your audience and tell them about what you do?
• Operations – what are your business processes? Work through every step.
• Financial – how much money do you need to get started? What will you be selling? What are the profit margins? What are your other streams of income?