Making a Business Plan

Roel Grit

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000035636
• Edition: 2
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

'This book is an excellent addition to any business plan. Making a business plan is unambiguous and written in plain language. It also serves as a handy reference book when revising and/or rewriting a business plan. Worth mentioning are the numerous examples given in the book, particularly helpful since financial terminology can be difficult for beginning entrepreneurs. It also has a logical layout. The corresponding website is helpful and the downloads useful.'

Roel van der Beek, Product Management, Netherlands Chamber of Commerce

STEP 1
Knowing yourself as an entrepreneur

An entrepreneur is someone with a business who works for himself and at his own risk. When things go well with the business, the entrepreneur reaps the benefits. When things go badly, the entrepreneur also bears all the risk. A good entrepreneur must possess a number of entrepreneurial qualities. A student is also expected to possess a number of entrepreneurial qualities. Of course, this does not mean that you, as a student, plan to start your own business. You need entrepreneurial qualities when after graduating you start working within an existing organization. As a graduate you – certainly in a management position – will have to be able to work out your own ideas.

The first step in our step-by-step plan provides an insight into which qualities – competencies – an entrepreneur must have and the qualities you yourself possess. If you lack important competencies you must do something to compensate for that. If you do not have financial insight you can employ a financial advisor or a bookkeeper, for example. Or you ensure that you get the knowhow by following a course. Having the right competences often determines whether or not you can succeed as an entrepreneur. If you make the business plan together with others, it is important to make an inventory of the competencies of the various team members. If important competencies are lacking in your team, you must make up for those.

You can execute steps 1 and 2 of the step-by-step plan simultaneously, or even change them around.

Types of entrepreneur

There may be various reasons for wanting to become an entrepreneur or writing a business plan:

• You have discovered a ‘gap in the market’ and you are chafing at the bit. You want to start selling your product or service.
• You want to be independent and not have a boss ‘above’ you.
• An attractive opportunity presents itself. For example, those beautiful premises in that wonderful location are suddenly available and you envision starting a business there.
• There is a suitable business for sale from an entrepreneur who wants to retire.
• You have been made redundant and find it hard to find another job. You want to mobilize your qualities and are more or less forced to become an entrepreneur.
• You are taking over a company from your parents.
• You are a student and must write a business plan for your studies in order to develop your entrepreneurial qualities.

Entrepreneurs can be divided in a number of types. Below is a division (free after Mulder & Ten Cate, 2006), in which each type is a caricature of reality. An entrepreneur possesses the characteristics of a number of these types.

The salesman

The salesman is a good talker, likes to associate with people and has an extended social network. He sees the gap in the market and thinks in terms of turnover. He knows the needs of his customer and often tries to create win-win situations. He is enthusiastic, dislikes conflicts and does not like criticism. He avoids making tough decisions that can damage others.

The inventor

The inventor is innovative and therefore always likes being involved with new things constantly. He is a specialist and knows what goes on in his field of expertise. Most often he is an individualist who likes to excel in his profession. Some inventors are such perfectionists that they keep on improving their idea endlessly. The inventor does not listen to the customer very well, is product orientated and does not like petty rules. Money is a side issue to him and he is a poor bookkeeper.

The refugee

This entrepreneur feels he is forced by circumstance into starting his own business. To him, being an entrepreneur is second best. He has been made redundant or does not get on well with his boss.

The visionary

The visionary is an entrepreneur who knows his line of business well, loves his company, and sees new possibilities for the future. He loves being a pioneer and innovator and often is very good at imagining how things are ‘going to be’. Recognition is important to him. His employees respect him and he stimulates them to work hard for the company.

The manager

This entrepreneur has often been trained as a manager, through study or courses. He tries to maintain the big picture of his business, reads management books, loves planning and is businesslike. In his striving for order the manager finds rules and procedures important. The manager does not like changes because that means deviating from his rules. He is often deeply involved in his career. He strives for an efficient business with opportunities for growth, even if that means having to let personnel go. He tells his employees what to do and calls them to account for their mistakes. Often he is not very popular with his staff.

The investor

The investor regards his business mainly as an investment that has to generate profit. Often he has invested his own money in the business. He is businesslike and has little consideration for his staff. Sometimes the investor sees his business as a game, but money – as well as power – are important to him.

The successor

This type of entrepreneur has not always chosen to be an entrepreneur. He has taken over the business from a relative or from his former employer. He has known the company for many years and has gradually worked his way up in it. In the initial phase he takes advice from the former entrepreneur but can also be bothered by him.

Special entrepreneurs

One special entrepreneur is the self-employed entrepreneur without personnel. Often he is a specialist who no longer works for a boss. He is independent and hires himself out to companies as a freelancer. He has more freedom and makes more money by the hour than with his former boss, but also runs more risks if and when the economy slows down. According to Dutch law a self-employed entrepreneur without personnel is just another entrepreneur, with the same obligations such as doing the accounting and registering with a Chamber of Commerce and the tax authorities. As a self-employed entrepreneur without personnel or a freelancer, it is important for both you and your client that you are designated as an entrepreneur by the tax authorities. There are all kinds of financial consequences to entrepreneurship, including a number of tax advantages. When you apply for a Declaration of Employment Status (abbreviated as VAR in the Netherlands), it will quickly become clear whether or not you are considered an entrepreneur. You can also join an organization that promotes the interests of freelancers (such as the FNV Zelfstandigen in the Netherlands).

In literature, the French term entrepreneur is sometimes used for an entrepreneur who is innovative. Innovation means renewal. That does not only have to apply to the product of the company. The way in which customers are approached (marketing) can also be innovative.

When you start a business during your studies, you are a student entrepreneur. The advantages of being a student entrepreneur are that you are used to making do with little money and can use the knowledge of your training college. Furthermore, students have few or no financial or any other obligations. Because they are usually not married and have no children they can invest a lot of time in the new business. Usually students are open to new ideas and can come up with creative solutions because they are not set in their ways. One risk is that they may neglect their studies.

A techno starter is a starting entrepreneur with an innovative technical product or service. Often a techno starter has to invest a lot in the setting up of the business, and it can take very long before profits are generated. Techno starters may be eligible for subsidies or innovation credit. They often work together with polytechnics or universities and settle in the neighbourhood or on the grounds of these institutes. In many regions there are organizations that bring together lenders and techno starters. For more information contact the Chamber of Commerce.

Entrepreneurial qualities

Before you start a business, you must be aware of your own qualities and weaknesses. It is important to know what you are good at and what you are not so good or poor at. This concerns matters such as knowledge, skills and competencies. If you have weak points that may hinder the setting up and leading of a business, you must ask yourself how you can improve on these weak points. Money-lenders will want to know that from you as well.

As an entrepreneur you are the centre of your company. You decide what happens and what does not. This asks a lot of your personal qualities. It is very important for you to take a real good look at yourself. On the Internet, you can find different tests to check yourself. One extended test is the E-scan entrepreneur test, which was developed on the basis of scientific research (Driessen, 2005, 2008). The test focuses on a (limited) number of entrepreneurial qualities, which are reviewed briefly below.

Creativity

A good entrepreneur thinks in terms of chances and possibilities. When things go wrong, he is creative in thinking up new ways of keeping his customers satisfied or in bringing in new customers. A creative entrepreneur can use a problem to create a new opportunity and he sees possibilities others do not see.

Market-oriented

A good entrepreneur puts his customer first and listens to him closely. He is market-oriented, focuses on a limited target group and knows the demands of this group. He also knows the competition. Entrepreneurs who do not think from their customer’s point of view, but from their product, for example, have little chance of success.

Independence

For starting entr...

Table of contents

• Cover
• Title
• Copyright
• Study guide
• Changes in the second edition
• Contents
• Eight steps towards …
• Making a business plan
• Step 1: Knowing yourself as an entrepreneur
• Step 2: Developing your idea
• Step 3: Setting up your business
• Step 4: Researching your market
• Step 5: Deciding on promotion
• Step 6: Organizing your business
• Step 7: Arranging your finances
• Step 8: Implementing your plan
• About the author
• Bibliography
• Glossary
• Index