1. How to Plan Your Business

When you hear the term “business plan” it's easy to be put off by the thought of some huge complicated dossier. But don't worry, it doesn't need to be as complicated as that. At this stage we're more interested in why you want to set up your business, who you want to serve, what problems […]

When you hear the term “business plan” it's easy to be put off by the thought of some huge complicated dossier. But don't worry, it doesn't need to be as complicated as that. At this stage we're more interested in why you want to set up your business, who you want to serve, what problems you've identified, and how you aim to solve them.

On this episode we're going to look at some examples from photographer Julie Christie, and shop owner Nicola Donnelly. Why did they decide to start their own businesses? How did they go about it? What can you learn from their experiences, and what advice do they have for you?

When it comes to the money side of things, we need to have a think about your anticipated startup and running costs. Then we can look at how much we can expect to earn, and figure out if this is a sustainable income for you to live on. For this segment we've brought accountant Gordon Howes on board.

And recruitment consultant Patricia McGuire has some advice for you on your long term goals. What kind of company would you like to have eventually? What would it look like, and how would you fit into it? Being clear on this can help you to work towards your goals, even if they seem a long way off at this early stage.

Finally, two of the biggest things that hold people back are

  1. Over-planning to the point that they never start
  2. Fear – just being so scared of what might go wrong

Recognising these obstacles early on is important if we want to overcome them. Yes, you're taking a risk, but you take a risk leaving the house each morning. As the old saying goes “A ship is safer in the harbour, but that's not what ships are for.”


If anyone was thinking about starting their own business, they felt they had a good idea, they had what it took to make it work, then I would say go for it.

Hey folks, I’m Colin Gray and this is Business Startup UK – the podcast which takes you, step by step, through creating your own business. Since this is the first show, it’s probably worth a little introduction here. As you’ve guessed, this is all about starting a company. There’s obviously a huge range of possibilities there. Maybe you’re looking to register self-employed so that you can do a bit of freelance work outside your main job. Maybe you’re going full time in the business, but there’s no need for a limited company yet. Or maybe you’re jumping in, feet first, and setting up a business with employees, VAT and all the rest, right off the bat. Whatever your aims, there are a lot of steps they have in common. Over the coming 6 episodes I’m aiming, with the help of many others, to give you a full grounding in business startup in the UK. That means what you need to prepare, what you need to think about and what you need to do as you set up your company. By the end of this first series, you should have a really good idea of your first steps, the pitfalls, the things to watch out for along the way.

In case you’re wondering who on earth I am, my name’s Colin Gray and I’m the founder of The Podcast Host. As you’ll guess from the name, we make podcasts and we help other businesses to do that too. I first went self-employed around 10 years ago now, I’ve set up 2 limited companies and helped with a fair few others. I definitely don’t know it all, though, and during this series we’ll be talking to a big range of other people about their experience. Some are experts in finance, law, sales or marketing, and others are just business owners – people who’ve gone through the same experience. We’ll be hearing about the highs, the lows, the tops and the pitfalls. All of this with the aim of making the whole process much, much easier for you.

So, enough explanation – let’s get to the meat of it. In this episode we’re talking about that first step for many – the business plan. Saying that, don’t worry, we’re not jumping straight into a 20 page document with super detailed market analysis, customer segmentation and financial projections – I’m just talking the plan for your business which you build up over a little time. It’s starts out with a look at who you’re serving, what you’re selling them and why they’ll buy it from you. But, even before that, why do you want to make this plan in the first place?

Julie Christie: I'm Julie Christie and I run a portrait photography business called Julie Christie Photography in Carnoustie. I was forced into making the decision to start my own business because we moved Howes from Glasgow to Carnoustie. I found myself out of job. I hadn't really been enjoying my teaching job and I thought, “Well, this is the time to do this. It's going to make or break. I'll do it.”

Quite a few people start out this way. They end up in business almost by chance. It just seemed like the best decision at the time, or, actually, it was the only decision to make! Others, though, they can't stand the thought of not doing it, not solving this problem out there that just seems so obvious to them.

Nicola Donnelly: I have always wanted to own a shop. I put it down to childhood dream for many years.

That’s Nicola Donnelly – owner of the Time Lifestyle Boutique in Dundee, and purveyor of many fine gifts

Nicola Donnelly: I went – . I did live sciences. I worked in comms and marketing. There was this niggling feeling in the background. Actually, I still wanted to run my shop.

That’s how it starts for many. Just this itch, that won’t go away. This desire to try something for yourself – something of your own. So, we mentioned planning at the start. How do you turn that itch into something that can sustain you, sustain others, maybe even grow into something huge? That’s where the planning comes in.

Nicola Donelly: I did my research. I decided now was probably quite a good time for Dundee, things were on the up. There was lots of exciting things happening in the city. I did my research and I decided what kind of shop that would be.

So, Nicola had the desire first, and then figured out the idea later. Others have the idea first, and the research then goes into whether that idea really has legs. The key thing here is figuring out the problem you’re solving and whether it’s a big enough problem to encourage people to pay for it.

Patricia McGuire: Have in the back of your mind some of the problems you think they're going to have. Pick up the phone and make the first call.

That was Patricia McGuire who runs a recruitment company in Switzerland. She brings up the biggest part of this stage – and that’s talking. You’ve got an idea, but you need to check that the problem really exists for your customers. In a lot of cases, you’ll discover it's actually not much of a problem for them or it's just not urgent enough to build a profitable business around.

Nicola Donelly: I did some surveying. I had a survey monkey questionnaire that went out and asked people what kind of things they felt were missing from High Street. I always had a hunch that it would go towards a lifestyle store. I asked people what their average spend would be. What brands they'd like to see. What kind of cash base or projects they'd want to see.

So Nicola had that hunch but, like Patricia, she went out and confirmed it existed with real people. She also confirmed that it's urgent enough as well– it’s painful enough that people are going to pay to fix it. That’s the basis for your business. It’s called your value proposition. What value are you offering your customers? What pain are you solving for them? And how much is that worth to them? If you’ve got that solved, then you’re well on the way. Alright, that’s the blue sky thinking, the possibilities, the aspirations. Sorry to bring us back down to earth, but the plan also needs the more day to day things like finances, costs, projections. Those are the bits that tend to put people off, aren’t they?

Gordon Howes: Now, you've probably had the business plan. You're thinking of some form of multi-layered spread sheet identifying all sorts of costs and income. It doesn't need to be as complex as that.

That was Gordon Howes, an accountant with Balfour Shaw. And, that’s what I was hoping he'd say. You do see the standard plan templates out there and they're really daunting. Seeing it laid out like that, all at once, can make it a huge barrier. But, there are ways to break it down, and there’s help too in doing it.

Nicola Donelly: I got help from Business Gateway to do my business plan. They helped me put it together. Actually going to their workshops helped me focus on a different chapter each week. Then, I built that up gradually.

So, it’s good to know that there are ways to make it easier. But, No matter how you dice it up, there’s a decent bit of work that goes into your business plan. You might think, why bother?

Nicola Donelly: I did, yes, actually apply for funding. A business plan was essential for that. It's also a really good idea to do anyway to keep you focused.

Convinced? Ok, I hope so. They’re right, you’re going to struggle to get money without one, in any way. And you’re also going to struggle to stay focused once you’re really in the weeds – once you’re struggling to keep the whole thing running. Suffice to say, there’s no point pretending that you’re going to stick to every letter of this plan once it hits the real world, but as they say, FAILING TO PLAN IS PLANNING TO FAIL.

Right, let’s look at the detail, what goes in here:

Nicola Donelly: The business plan had basic things like aims and goals of the business. Your costs, your marketing plans. Then, a bit of your research about who your customers and your products are going to be.

We talked about customers and products earlier – that’s covered, but now we’re getting into aims, goals, costs. If you're getting into a particular sector, presumably you know a bit of the ins and outs. Figuring out the costs, the yearly income pattern, and the cash flow should be pretty feasible, especially with the help of an accountant. But let’s be honest, though, the financials are always a guess. But you want to make them as educated a guess as humanly possible. And timescales? That’s where I’ve struggled before – thinking long term. Here’s Patricia again:

Patricia McGuire: I would have two. I would have a plan that saw me through the next year. Then, I would have a plan over a five year period.

There's two things here, isn't there? There's the five year plan which is your aspirations. That's where you see the business going in five years. Projecting where you can reach. This is where you want to think big but be able to back it up as well. There's no point in saying you'll be earning a billion without a realistic route to making that many sales. But aspirations, realistic ones, are how you’ll attract investment, partners, staff, and, of course, motivating yourself along the way! Then there’s the other side, the one year plan that Patricia mentioned – that’s the important one for short term survival and your accuracy here should be much higher. What do people often miss?

Gordon Howes: Initial set up costs. These are always the things that people probably underestimate when they start a business. You need to know how much your outlay is going to be. If you're going to take on a tea room in a café, for example, are you renting it? Does the rental include the fixtures and fittings that are already in place? Indeed, are the fixtures and fittings in place? Do you have sufficient tables and chairs? Do you have the napkins? Do you have the cutlery and crockery? All these things are startup costs that probably exceed what you expect. Because once you start delving into it, you find that everything isn't exactly as you anticipated. A key to any business plan is timing your cash flow. You have to know when you expect the income. How much you expect at any time, and when you anticipate the expenses to be.

So, estimations and realism – that seems to be the key for the short-term plan. Cash flow is the really important here. Show where your money will come from, and where it will go out. That’s leaves profit – and that’s what you’re hoping for.

Finally, a lot of smart people advocate figuring out what your company might look like when it’s finished – whatever that means. When you’re done building, what’s there? If you take that to its conclusion, it also means planning for escape, before you’ve even started.

Patricia McGuire: The other thing I think is quite important when you're starting out. It might seem weird but start thinking about the type of company you want to have. By which I mean culture of the company. Because, sooner or later, you're going to want to employ staff in that company. You want to have thought about that before you get to that stage. And there are other things that I think you should be thinking at the beginning of your business. For example … Again, this might sound ridiculous but you might want to sell that business. You might be starting the business in order to sell it sometime in the future. You need to have a plan to do that. Because I think, personally, you want to try and sell more or less at the peak of your business. You don't want to miss that peak. Plan for it.

Ok, planning planning planning. Vital stuff, in its place. But Patricia had some final wise words for us:

Patricia McGuire: The more you can plan for the better. On the other hand, don't get so bogged down in plans that you don't actually do anything. The most important thing is to start work. Just go and do it because you won't regret it.

Hopefully, that's put a bit of clarity around business plans. What they’re for, what goes in them, and why they’re worth it. For most, I’m sure it still looks pretty daunting though. Don’t worry, if it does to you, you’re not alone. Remember what Patricia said though – don’t be afraid to start the work. A lot of people could learn from Julie’s example:

Julie Christie: Well, I suppose what the natural first step should be is a business plan. Actually, I have to be honest, I didn't do any of that. I was quite naïve and quite innocent about the whole thing. I really just went into it head first. Everything else, all the other things that you're supposed to do, I kind of did them bit by bit over time.

Now, I know that Julie knew her customers, she knew the problems they had, and even had a good idea of how she stands out. What she's saying is that she didn't go into the details of income, costs or cash flow. She just trusted in her ability to make ends meet. Possibly not the most advisable way to start out, I’ll admit. But, as she says, she filled in those gaps as she went along. Much like Nicola mentioned earlier, with the help of the Business Gateway. For sure, it depends a lot on context – it's easier to do this as a one man band, no so much if you have investors, a team and you're having to meet payroll every month. Plan or not though, Julie sums up what a lot of entrepreneurs feel in the first year.

Julie Christie: Fears-wise, I had so many fears. I think the greatest fear is that it's not going to work. You're not going to make any money. Your partner is going to be willing to bet that as well. Will you find any clients? Will you be good enough? All those worries that I think everyone has when they start up their own business. When you ask, “How did I overcome those fears?” I don't know that I actually have. I think I still have those fears all the time. I think it's just pretending that you don't have the time really, isn't it?

Pretending? yea, but then what do they say, “You are what you pretend to be.” Make the plan, feel the fear, pretend you don’t care and do it anyway! Now, you have your own business. You've been listening to me Colin Gray, and this was Business Startup UK. On the next episode, it’s time to decide what type of business you’ll be using to execute these carefully laid plans. Are you a sole trader, a partnership or a limited company? Tune in next time to find out.

In the meantime, head on over to the show notes at thepodcasthost.com/startup for and summary and links to everything we’ve talked about today. That includes all of our excellent contributors and the businesses they run. Business Startup UK was created by The Podcast Host as part of the 3B Podcast Network. Thanks for listening.

Whether you’re looking to create a company with staff and premises, or just make some additional income as a freelancer in your spare time, this is the show for you.

In each episode we’re going to dive into the nuts and bolts of a particular topic, breaking things down into bite sized and easy to understand chunks.

We’ve enlisted the help of some trusted accountants, financial advisers, marketers, authors, and fellow business owners to bring a tonne of experience and advise to the table. And pulling everything together is the host, our very own Colin Gray.

In season one, we’re going to be giving you an introduction to planning, starting, and growing your business. We’ll then take a break before moving into season two where we’ll cover one of these topics in-depth.

We’d love your feedback on the series and what you’d like to hear in the future, so please get in touch with any ideas or suggestions on Twitter @thepodcasthost.