I held a webinar last week on business communication, and it was fully booked out.

A few people already ran companies, or worked for them, but the majority wanted to start their own.

It’s something which is becoming increasingly common in the pandemic, as millions look to a different, and brighter future – such as working for themselves.

So, to help, here’s part three of the quick and easy way to write a business plan, to see if your idea for a company of your own could work.

Cost Structure

There are lots of different ways to structure a business, but the key question is whether you can bring in more money than it costs to run.

Your cost structure is a critical part of that.

Think of everything you need to make your business work, and where the majority of the spending will go.

Generally, it’s paying staff. Which is why one person businesses are so common.

It’s easier to make it pay, and to keep on top of everything if it’s just you.

But even then, you’re probably going to need a bookkeeper, or an accountant.

And what about the tools of your trade? From actual tools for a builder, to laptops, a desk etc for a writer.

Don’t forget the costs of working from home if that’s you plan, either.

 

Larger businesses quickly get more complicated.

Uber, for example, put huge investment into their tech, and that’s before you get to staff, offices etc.

Specsavers need high street premises, plus lots of staff, and don’t forget the raw materials, supply lines etc…

 

There’s generally more to think about than you expect with a cost structure.

Make sure you have everything covered when you think about it, so you don’t get any nasty surprises later.

 

Revenue Streams

This follows naturally from your cost structure. Can you bring in enough money to make the business pay?

It’s worth noting here that you don’t have to be profitable immediately.

Most businesses aren’t. It can take a while to drum up trade, win a reputation and gain market share.

But that doesn’t mean your idea can’t work.

Some of the biggest businesses, high street names such as Airbnb and Uber aren’t yet profitable. In fact, they lose billions.

But investors expect they will eventually make money, and massively so, which is why they keep providing cash.

Like so much of business, it’s an educated gamble.

 

Work through where your money is going to come from.

It can be straightforward, such as doing a job and getting paid.

Or you could have a retainer, licencing system, ongoing contracts, or take a share of the profits of a company you work with.

Don’t forget to try to maximise your income.

Deliveroo, for example, takes a percentage from the outlet it’s delivering for, as well as charging the customer a fee.

 

Writers are an interesting example of maximising revenue streams.

Despite the romance of the industry, it’s hard to make it pay just churning out books.

So, for myself, I earn income not simply from my books – fiction and non fiction – but writing articles, teaching, and giving talks.

Some of that also feeds into Creative Warehouse, my business communication consultancy.

Always keep an eye out for ways to bring in extra income. You’d be surprised what can pay.

 

Metrics

You need to keep an eye on how your business is doing, particularly if you start by losing money.

Have an idea how long you can afford to be loss making for – known as your runway.

How long can you give it before you conclude the business isn’t going to work?

 

I’m no fan of giving up. Actually, I just don’t. But I do adapt.

It’s very common for your initial business idea to not quite work, but with a tweak… success!

A great example is YouTube. I think we’d all agree it’s doing pretty well now.

But it may surprise you to know it started out as an online hookup site, and was awful.

The founders saw that immediately and changed their business model.

Metrics will help you keep a check on how you’re doing, and tell you if amendments to the way you’re working are needed.

 

The bottom line is the standard measure of success. But it’s not the be all and end all.

As I mentioned above, you can make a loss to start with so long as the metrics for how fast you’re growing with customer numbers are good.

 

 

That’s it for the basics of a business plan in three blogs.

If you missed parts one and two, they’re here and here, although you can read this series in any order and they should still make sense.

 

One final thing to say, and it’s important:

If you’re thinking of starting your own business, remember this.

It can be hard work, with long hours, and frustrating.

But it’s also hugely fulfilling.

I did it, and I’m so glad. I’ve learnt an enormous amount about business, the world, and the people in it, and it’s really energised me.

Every day is fascinating, wondering what’s going to come it, what ideas myself or the team will have, and how we’ll play them.

Working for yourself, building your own vision, is a wonderful feel good in life.

And yes, since you ask, I have managed to earn a very good living as well!

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