Writing your business plan

This is your plan

Even if you’re undecided as to what your business or operation is going to be like, you’ll find the following exercise of writing even a rough idea of how your future business is going to operate is worthwhile. You may find it easier to read through this section in its entirety before writing your plan. By the end of the exercise you will have a greater appreciation of what your business will be like and how much money you're going to need to set it up.

Whatever way you want to tackle this, remember this is your plan. You don’t have to show it to anyone at this stage. A business plan is not a legal requirement for any business. You will only have to show this to anyone if you wish to borrow money to start your enterprise. Writing a plan before you start will show you what you need to do in order to achieve your goals. If the plan doesn’t deliver, then all you have to do is re-write it. I wrote countless plans before I started, so be ready for more than one attempt.

Guidelines for writing your business plan

• Always be realistic in your planning.
• Accept that you may have to write a number of plans before you’re finally satisfied that your plan is complete.
• A good idea is to write three separate plans
  • the first, detailing your worst-case scenario
  • the second, what you think is achievable and finally
  • the third, your ultimate plan.

This is the one that you’d really like to achieve but have some, if not many, reservations about.

• Whatever your plan, make sure it includes a contingency plan.

Describe your current financial health

This is one of the most awful things that I had to do – describe on paper my financial health. Depending on your personal circumstances, past and present spending habits, this can be a fairly stressful exercise, but worthwhile and essential.

You will need to:

• Detail all your present outgoings.
• Deduct any regular incomes, for example part-time salary, pension, etc.

The difference between what you spend and what income you currently have is known as survival income. The minimum amount of money you will need to earn every month in order to say afloat.

Don’t confuse survival income with what you will ultimately want to pay yourself.

Survival income planner
What I need to pay every month
Mortgage/rent	£
Loan re-payments (total all)	£
Credit card repayments	£
Home and contents insurance	£
Gas/electricity	£
Telephone	£
Mobile phone	£
Food	£
Council tax	£
Car, including insurance	£
Car tax (divide annual fee by 12)	£
Other expenses	£
Total expenditure	£
Survival income	£ (equals total expenditure)

Shocked? Don’t worry; this had me breaking out in a cold sweat too. For those of you who are enjoying excellent financial health and your current income exceeds your expenditure, congratulations! Working out your survival income is the first part of assessing your financial health.

How long could you survive without earning, or achieving your survival income?

With prudent planning and careful research, this is a situation you shouldn’t arrive at. However, it’s possible and even likely that in the early days your business will not earn enough to cover your survival income. I stress that this is in the early days. To carry you through this period we need some cash reserve. This is known as working capital.

Survival income is too high: if your survival income is on the high side and you have no working capital, then don’t despair. You can still start your gardening business. How about beginning on a part-time basis with your objective being to reduce your personal debt, or building up a cash reserve so that you have enough to get by in that initial period when you go full-time?

Be honest: make sure that you’re honest with yourself. You’re planning for success – you don’t want your business to be another statistic. So really look at your spending. If at present you’re earning a large salary, which is unable to meet and cover your monthly outgoings, it is most unlikely (not impossible) that your business will initially be in a position to redress the balance.

Consider a part-time business

If you’re earning a relatively good salary at the moment and are unable to meet your current financial commitments, i.e. you’ve always too much month left over and not enough money, then I would advise you to think very carefully about starting a full-time operation. Your business needs room and breathing space to grow. Turn a negative into a positive and start part-time. Start working to pay off whatever debts are keeping you stuck where you are. You’ll have great fun doing it. Before long you’ll be ready to leap full-time into your business.

Detailing your business idea

In Chapter 1 we had a look at what skills you have. Now it’s time to put that together with your business idea and write a short paragraph, which describes your business. Ten or so lines should be sufficient. If you’ve already thought up a name for your business, great, use it. When describing your business and the services you’re going to offer try to:

• be specific
• be creative
• be adventurous
• be positive.

Your business statement

’My gardening service is initially going to be run part-time so that I can fit it around my present commitments. I can start by offering the following services...’

You’re not writing an ad so don’t worry if it sounds terrible. You’re not going to be showing this rough draft to anyone.

Describing your service

Do you want to build a gardening round where you have regular clientele with weekly or fortnightly appointments? A lawn cutting service that includes sweeping paths and cleaning borders as you go? Or are you only going to undertake the larger jobs where you quote in advance for your work and do not charge hourly rates?

The business you choose to start will depend on a number of factors:

• your own personal requirements
• the market place peculiar to where you live
• what’s already being offered in your area.

Don’t be surprised if, by the end of the book, your original plan differs from what you put down now.

I review my business plan on a quarterly basis and I’m constantly looking to improve upon what I’m offering my customers and streamlining my business.

The most important thing to remember about your plan is that it must be both flexible and adaptable. Throughout this book we'll be looking at ways of ensuring your enterprise stands a good chance of passing through survival and entering the successful stage. To do so, both you and your plan must be open to change.

What costs are involved in starting your business?

Now that you have decided on a rough outline of what services you are going to offer, you will have a greater idea of what you need to have in order to provide these services.

The tools of your trade

When I first started out I used the tools that I already had. Generally, this was fine. However, I decided that my small electric lawn mower was neither suitable nor capable of cutting some of the lawns I was being asked to do. Many of my new clients were out at work when I visited which meant that there was no way of plugging in my mower. Clearly my electric mower was unsuitable for these jobs yet ideal for gardens that had no side or rear access (you’d be surprised how many exist), which meant having to carry my mower through the main hallway and out of the back door. Thus I had to buy a new mower.

There’s no need for you to buy anything. If you’re planning to operate a small gardening round, where you visit your clients on a regular basis, weekly or fortnightly, it’s possible that you won’t have to buy your own tools. Instead you can use theirs. In my experience this can be most satisfactory and means that you can travel to and from your jobs either on foot or on a bicycle, which really does reduce your operating costs.

The only real drawback with using your clients’ tools is that to begin with they may need sharpening and some tender loving care. But this is merely an initial inconvenience.

Larger operations

If you’re planning a larger operation you will need to give some thought to acquiring your own tools.

Strong, quality professional tools are worth their weight in gold. Don’t be tempted to rush out and buy cheap, DIY store branded goods. Believe me, they’re not designed for the sort of punishment you’re about to inflict on them. Buy the very best you can afford. I’ve lost count of the amount of cheap tools that I bought in my early days that lasted less than a week and had to be flung in the bin. It’s a false economy and a costly mistake that you should avoid.

Guidelines for buying tools

• Buy the very best that you can afford.
• If you can’t afford to do that, don’t buy at all.
• Electric tools are generally cheaper to buy than their petrol counterparts, but don’t be tempted to buy them for this reason. Petrol tools mean you can work anywhere with your own independent tool supply and are safer in damp weather.
• Buying used equipment is fine, but make sure that what you buy is of sufficient quality to do the job.
• Remember, whatever you buy will most probably be used every day. You’re no longer a once a week gardener. Your tools will need to be able to work as hard as you do.
• Always buy from a reputable source and get a receipt.

We’ll take a more detailed look at tools, what to buy and where to get them in Chapter 3.

When calculating your initial start-up costs only include those items you need now and try to avoid buying everything in one go.

Start-up costs planner
Tools	£
Stationery	£
Advertising	£
Telephone	£
Protective clothing	£
Training	£
Insurance	£
Other expenses	£
Estimated total start-up costs	£

If you’re unsure what figure you should include, then give an estimate. We’ll look at what insurance you may need in Chapter 3. Costs of insurance vary a great deal depending on who you are, what you’ve claimed for in the past, where you live and so on. For planning purposes budget on at least £200 to cover third party liability.

Using your home telephone or having a dedicated business line

Whether or not you use your own personal telephone for business use is your decision. I installed a separate business line when I first began so that I was able to know for sure if the caller was a client or not. I felt the investment was worth it for the professional image alone. Depending on your budget, you may wish to postpone this until your business starts earning cash. But remember if you do this, then a proportion of your early clients will be calling you on your home phone.

A separate business line has many advantages:

• You don’t have to change your number some months down the line.
• You can deduct the charges, including installation, as tax expenses. All things considered, I feel the investment in my business line was worth it.
• If you use the family line, then potential clients can only get through to you when the line is free. If your phone is forever unavailable then all your hard work amounts to nothing.

Financing your new venture

While it is unlikely that your new venture is going to costs thousands to get underway, you will need to have some money available to get started. You’ll also need money available to pay your weekly businesses expenses, which may include:

• fuel for your lawn mower, car etc
• dumping costs
• materials
• miscellaneous costs
• staff costs.

In the early days you will need to have either cash or credit available to cover these expenses. The smaller the operation you are planning, the less you will have to have available.

In the future, as you expand your range of services and build your business, you may need to get outside help from banks or other lending institutions, but you should be able to cover your initial start-up costs yourself.

What’s in a name?

What you call your business is important.

• Be wary of using cliched names. There are far too many Joe Bloggs, the West Country’s answer to Groundforce, or Mary Silver, Green Fingers Gardening Services.
• Try to be upbeat and upmarket when deciding on what to call your venture.
• Avoid choosing a name that suggests what you’re offering is cheap and cheerful.

Be imaginative, inspiring and remember that your name will be with you for as long as you’re in business.

When I carried out my initial market research for my venture, I discovered that people in my area liked doing business with a person as opposed to a business. Potential customers told me that they are far more comfortable phoning a named person, as opposed to a business name. Thus I called my venture Paul Power Landscapes.

I’m confident that my company will deliver what we say we’ll do. I’m also proud of achievements in creating and maintaining beautiful gardens. My name is my reputation. My motto is:

You take pleasure, we take pride.

What legal entity are you going to trade as?

Prior to starting, you will need to decide what legal entity your business is going to take. There are a number of options:

• limited company
• partnership
• sole trader.

Limited company

A limited company is a legal entity in its own right. This means that it can sue, or be sued, under its own name. However, the liability of its members is limited to the amount they have invested. A company is not any one individual and is made up of directors and shareholders. It continues to exist in the event of anyone’s death. There are lots of regulations on how companies are managed and how they maintain their accounts.

It’s unlikely that this will be a suitable entity for your business.

Partnership

The law describes a partnership as ‘The relationship which exists between one or more persons carrying on business in common with a view to profit.’ A partnership can exist through a verbal or written agreement or by implication.

If you’re deciding to start your venture with another person and you both will jointly invest in the business then this a partnership. Although a partnership can exist through a verbal agreement, it makes sense to draw up a written agreement covering all aspects of your planned business, including what will happen if one of the parties wants to leave the business or sell their share. Each partner is equally responsible for all the businesses debts.

If you’re considering a partnership, you will have to accept that you will not be the sole decision-maker. Therefore you have to be very careful with whom you choose to partner. Many business partnerships consist of husband and wife teams.

Make sure that you have proper written agreements in place. It’s worth employing a solicitor to do this for you, for if you fall out with your business partner, or one of you wishes to go a separate way, this may mean having to wind up a successful business.

Sole trader

A sole trader is one who conducts their business by themselves using their own or a business name. This is by far the most common form of legal entity used by most small businesses.

The advantages are:

• You, the proprietor, retain full control of your business and its profits and are not bound by the same bureaucracy and regulations as a limited company.
• There are no legal requirements for you to have your books externally audited, or have an accountant or for you to register your business name.

Of course you, and you alone, are responsible for everything. It’s up to you what entity you trade under, but the vast majority of small businesses of this nature will either trade as a sole trader or partnership. It's unlikely that you will need to form a limited company, at least to begin with. But the decision is yours.