You have to think systematically through how you’ll establish your business in order to feel secure that your undertaking is achievable and have a solid working foundation when you start operations. The more preparation you do when developing a business plan, the more you can concentrate on the practical tasks associated with starting up.
If there are several owners who are collaborating on your new company, the business plan gives you all a basis for discussing and clarifying the challenges you’ll face and how you should meet those challenges.
Whether in contact with the outside community or in connection with investors, suppliers and/or other partners, you should have a plan that shows that all aspects of your idea have been carefully considered. This plan should also show that your company will generate a profit.
You should clarify the following points in your business plan:
- Business proposal (plus Summary)
- Background and prerequisites
- General project description
- Strong and weak/unresolved aspects
- Market and competitors
- Budgets and financing
- Accounting and auditing
- Organization and management
- Establishment and startup
- Examples of business plans
Including these points in your business plan will give you a solid basis for strategizing and planning; it’s also useful documentation to show your bank, investors, suppliers and partners if necessary.
Briefly describe in 1 or 2 sentences your idea behind establishing the business and why this is a good idea, including:
- The basis for your product/service, emphasizing 1) the customers/users (target groups) and 2) how their needs will be met by your product/service
- Your business type, f.ex. if it deals with trade, production, services, etc.
- Your business proposal should be clearly specified and easy to present.
When working on developing your business proposal, you can find helpful resources from several websites, including that of Innovation Norway.
Because bank managers and investors are often very busy people, your business proposal should include a brief summary (1-1 ½ pages) at the end that highlights its most important points.
Background and prerequisites
Give a brief description of how your business proposal came about, why you feel it’s a good idea (based on users’ needs) and how you will meet those needs. Add a bit about your own background and why you’ve chosen to invest in this idea in particular.
General project description
- Status – what you’ve done and how far you’ve gotten
- Plans – which areas you might explore in more depth and what you’ll do to make sure that your new business will become established and successful
Strong and weak/unknown aspects
List the advantages you feel are important, f.ex. your (and any other partners’) areas of expertise, resources, new markets, flexibility and service, etc. Be honest with yourself and others; briefly discuss what might turn into a weakness or what you have to clarify more. It’s important that you’ve thought through these kinds of difficult questions carefully—before other people start asking these same questions.
Market and competition
Developing a market is probably the most demanding part of the entire startup process. Start out with the familiar and concrete before moving on to the unfamiliar. Which products and/or services will you provide? List the points that comprise your main message and provide brief comments about each point.
What will be your main market area, f.ex. geographically and/or customer groups? Make sure to include documentation showing what you’ve done to map out the market.
Your message also has to reach your potential users in a way that will make them want to buy your services/products. It’s very likely that your users already have their needs met: how has this happened? And if this is the case, who will be your biggest competitors? How profitable are these competitors? What will be your most important advantages in relation to these competitors – seen from a user’s point of view? Budgets and financing Make sure to set up your sales and operational budget in two versions – one for the startup period and one for the first year of business. The budget for sales revenues and variable costs should preferably be broken down into the number of hours/units multiplied with the net price and equivalent for variable costs.
This provides an overview of what you’ll have to pay for investing in the business before you can «push the green button» and start it up. All of this must be financed either by your own funds or through a loan.
This provides an overview of the cash flow through the company. If there are amounts moving through the business, f.ex. purchase of goods, warehouses and outstanding receivables, you can risk going bankrupt even if your profitability level is high. Based on your company’s operating budget, information about credit time in and out, production times and due dates from your bank, value added taxes and employer taxes, an accounting firm will easily be able to write up a liquidity budget. Whatever your investment costs are – plus any operating costs before revenues start coming in – must be financed by your own capital/efforts/fixed assets, plus loans and any grants/stipends you may have been awarded. Tekna collaborates with DNB on banking services for members who want to start their own business. You’ll also find useful tools here for making a budget.
Accounting and auditing
All joint stock companies, other companies with 5 participants/at least 5 employees, and sole proprietorships having a total of at least 20 employees/a net worth of at least NOK 20 million have an accounting obligation. According to The Auditing Act, any company that has an accounting obligation also has an auditing obligation. You should also feel an obligation to keep organized accounts for yourself for purposes of constant oversight and administration as well as a basis for assessing profitability and investment areas. Do you want to do your own accounting or hire an accounting firm? If you choose to do your own accounting, it’d be wise to consult with a licensed accountant or auditor in advance in order to create a chart of accounts and good practices.
Organization and management
Which company type has been selected? Who are the owners, or shareholders? Who in addition to you will be part of the management team? The board of directors? – You must have this if you want to start a joint stock company. It may be wise to evaluate outside individuals (independent board members) who can provide expertise and contacts. Perhaps you should have a group of people to support you no matter what, even if you’re not required by law to have a board of directors for your chosen type of business. Where are you going to operate your business, what about sites and equipment?
Plan for establishment and startup
This must be included to provide a brief description of your plans in the coming weeks and months, up to and including your startup date.
Examples of business plans
Altinn has useful information on starting a business on its website.