Today we are not so much as going to look at writing a business plan but identify how writing a plan should be approached - with the emphasis on your own decision making - by looking at yourself and your future business from the outside facing in, rather than the inside facing out.
What is a business plan?
A business plan is a route map of your planned journey through a set period of future business. It's designed to explain much about a proposed or existing business in a simplistic way and should be a concise but brief snapshot of a business setting out business objectives, strategies, the market the business operates in, as well as its financial forecasts - I'm not going to re-invent the wheel at this point so here are some excellent resources to help you with the mechanics of writing a plan:
Business Link - Preparing a business plan
The Startupdonut - business planning
A business plan can be any size shape or form. It matters not if you formulate a plan in your head, on a fag packet, a single sheet of paper or in a telephone directory sized presentation - they are all plans.
Does every business need a plan?
No and yes: whilst it is not necessary to write everything down, when you do so - and read it back - it is much easier to determine if you've made any errors or if what you are planning is actually viable.
Many new garden maintenance or small landscaping businesses grow organically; by that I mean they start off small, have little need for outside finance and are just a means to provide their owners with an income and there are no real aspirations to become a large organisation.
It is these small owner-operated businesses that are often instinctively run and because they operate within a tight structure - i.e. the owner has a strict timetable of scheduled work and does not need to plan for additional staff and they are not looking to expand, there is little or no perceived need to operate a business plan.
All businesses need to make a profit
One thing we all have to do - no matter what size of business we are - is make a profit.
Landscape Juice member, Elaine Clark of Cheapaccounting.co.uk says, "the small business needs to ensure that it is making a profit and is really a business rather than a hobby" .
One-man-bands or husband and wife type enterprises may not require (i.e. there's no need to attract external funding or investment) a full business plan but it is important to isolate the two most essential elements - sales forecasting and cashflow forecasting - it's probably the lack of understanding of these two important elements that leads to cash shortages and business problems later down the line.
When working out an hourly rate, make sure you add a net profit into your figures.
Having enough cash to trade
If you are operating a small business it may not be necessary to have a great deal of cash reserves to get up and running but if your overall plan is to be successful it is necessary to know what demands are being placed on resources - bear in mind that even if you've agreed an overdraft with the bank to cover any shortfall in the first few months or year of trading, any demands for cash you don't own will incur an expense, which impacts the bottom line net profit - make sure that this is taken care of in the overall plan and especially the cashflow forecast.
If the 2007-2010? recession taught us nothing else it should have least taught us that despite there being a plan in place, the business environment can change dramatically.
With this in mind it is essential that anyone who's undertaken to work to a business plan must also be able to modify or abandon that plan should it become impossible, or negligent, to continue on the previously determined route.
Gardening businesses face a unique set of challenges
Any plan should always include a contingency that identifies likely areas of disruption.
The recession (using hindsight) is one example of how the desired business path has been severely disrupted but for garden and landscaping businesses there are a set of unique challenges that have to be built into any plan.
For example, in year one of your new business you may have identified that there is X number of hours you can work and get paid for in the months of December, January and February. On paper, the level of income looks good but should there be a high level of disruption caused by snow and ice, for example, then your plan becomes worthless unless there is a contingency built in.
That contingency might be that you've already planned to include working Saturdays and overtime during the spring and summer months so that you can build up some residual by the way of savings and safely abandon any working days that are called off due to the ground being frozen or you cannot physically reach your destination.
Some businesses might look to include path and drive clearance and salting/gritting as a contingency (although even a projection into this area of work might be unreliable).
The winter months bring shorter day lengths - think about how you sell your time. If you arrive on site at first light and leave when it's no longer productive or safe to work then there is every chance you'll be able to sell a full days services. If you intend to travel between one or more jobs on a winter's day you'll have to think about how your business plan copes with the potential loss of earnings (or how you'll set an hourly rate) when you are travelling.
Taking time out for training or education
If you've already gone through horticulture college and have a qualification behind you then the chances are you'll be able to get on with your new business without too much disruption. If however you've identified the need to top-up or increase your knowledge by taking a course then these hours will have to be planned for.
None of us are superman and we cannot do everything but if you've forecast a need to work 50 weeks x 8 hours to make the kind of money you'll need to cover your costs and make a profit, then taking a few hours or a day a week from your estimates means you have to plan to make up the shortfall.
Example: If you have identified that you need to make £20,000 per year
2000 hrs a year (50 weeks working 8 hr days) @ £10.00 = £20,000
Go to college for one day a week for 10 weeks means you'll have to raise your hourly rate to £10.41 or work 80 hours of overtime during the course of the year when you are not attending college.
You'll have to add travel and sundry expenses into the equation and make the necessary adjustments to your plan too.
All of the above is by no means exhaustive and there will be crossover with other elements of starting and running a garden business in coming weeks.
As always, please feel free to leave a comment, ask a question or add any snippets of information based on your experience.
You may need to take legal or accountancy advice before proceeding.
Topics covered so far:
Business idea and evaluation - asking yourself some tough questions
Business plan - how to plan a business plan
Determining your market and finding customers - finding your rightful place on the ladder
Advertising your garden business Registering a garden business