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Recipe for success

HE MEANS BUSINESS: Levi Roots outside his east London restaurant

IT SEEMS that everyone is starting up new business. Somehow, 2016 seems to have inspired so many people to kick-start their business dreams and I am always being asked for tips. So I’ve got a few.

To cook up a successful business, you need to choose quality ingredients. But first you need to decide whom you are cooking for and how many are coming to dinner, just so that you can set your budget and plan your menu. Only then will you know which ingredients you will need.

My questions for you first are: What kind of business are you dreaming of making a success? Where do you see your business and yourself in six months, one year, three year or five years?

Is it a product or a service? How much do you know about the field you are going into? Do you know the difference between a limited company and a sole trader? Do you understand a balance sheet? Have you learned the difference between gross profit and net profit?

What skills do you have to make your business work? And who do you know who has the rest of the skills you need?

Many people starting up a business will have some commercial experience and would be able to answer my questions, but a surprising number have none at all and it would be like hearing gibberish.

The planning stage is a step to take seriously. Fans of Dragons’ Den will know that the vast majority of people whose business pitches fall apart have not prepared all their business ingredients. Something is always missing. So my advice? Prepare your business plan as if you were going onto the show. In fact, you will be doing something similar every time you pitch to a new customer, every time you try to sell your product and every time you speak to the bank manager about investment. So the same approach is required.

Your business plan has to be as much about you as it is your business, reflecting your preparation and enthusiasm for the long-term vision. All the knowledge you acquire during your market research will now be turned to practical advantage. Everything you know must now come out in the business plan, direct from you.

Just take it one step at a time. Your plan will take time to develop properly. Don’t expect to be able to prepare it all at the last minute before your presentation to the bank. It has to be like the foundation of a house. It is built to last.

However keep it simple – this is not a piece of creative writing. It is a set of plans and directions showing how you plan to make more money than you spend. Don’t complicate things by including good intentions and imaginings.

It should include your objectives. This is a brief statement of why you have created your plan and the period it covers, so investors can navigate it easily. Your plan should consist of these five:

1) The business opportunity: You need an overview of why there is a gap in the market and how you will fill it. This is your supporting evidence. It tells potential investors that you have done your homework and that there is a genuine opportunity out there.

2) Unique Selling Point (USP): This is what you have to offer, which is different. Your USP is a statement of why it will work and why the consumers and clients will want to buy it.

3) Sales and marketing strategy: This tells the potential investor how, why and when you are planning to role out your plan and how much it will cost per month to reach those targets.

4) Sales forecast and costing: This breaks down the number of units you expect to sell on a month-by-month basis, also it should show how much money you have coming in and when. By the way, all the numbers must add up. Be careful not to overestimate this figure.

5) Investment: This part is about what you are looking for and the period of time over which you need it. And crucially it’s about the return on the investment you’re asking for.

Right then – you’ve got some work to do. Happy cooking!

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