Starting a new business is very exciting for the new entrepreneur, but before starting or making any investment the person should first make out a business plan. The plan should describe explaining what the business will do, how and where it will be done, who will run the business and how it will be funded. Next, the person should focus on the financial aspects, and normally comprises a profit estimate, a cash flow forecast and accompanying notes. However, it does not need to be a large document and indeed is possible to be more efficient if it gives the reader all the relevant information in just a few pages.
Nevertheless, the more detailed the proposed venture, the more detail is likely to be required. Preparation of a business plan serves several purposes. Initially, it requires a commitment of the ideas for the new venture in writing. In writing it down, fresh ideas may spring to mind, which may help to clarify the specific direction that one wishes to take, rather than start out without planning the route. If there are any basic mistakes in the business plan, it is good to identify these in the beginning, rather than come up against obstacles at a later date, when any corrections cost a lot of money and time.
The other and very important purpose of a business plan is to encourage prospective investors to consider the financial aspects of the planned venture, such as pricing policy, whether the business will provide him with the desired level of income, how much capital he will need to start up and how his bank balance is likely to stand from month to month. Only by calculating the expectations will be known later on whether things are going as planned. The third purpose of a business plan is to help in raising finance. This may be financed from private or corporate investors. By having cash flow forecast readily available within the business plan, one can save precious time.
The entrepreneur will have to decide whether one is going to run the business as a sole proprietorship or as a limited company. The size of the business can often affect the decision, and it is not unusual to see a business set up in somebody’s own name and then switch to a limited company after a year to two. Improving the marketing is probably the biggest single improvement one can make to his business. Find out about the latest marketing techniques on vital marketing and ways to improve the existing advertising and marketing one is already doing without spending any more money.