More than a few great business ideas have been born into the world at 2am after a couple of glasses of vino, with a brief business plan sketched out on the back of a cigarette packet or a restaurant napkin.
Unfortunately, doing justice to your amazing business idea is going to need a lot more than the ol’ ‘back of a napkin’ plan. What’s really needed is some detailed planning to make sure your creative enterprise makes it from the drawing board and into reality. This has to then be followed up by regular, systematic reviews of your budgeting, performance and long-term strategy to keep you on the track to success.
In short, this means ‘winging it and seeing how it goes’ is simply not an option for a serious creative entrepreneur or agency start-up owner.
Define Your Big Idea
Being able to encapsulate your commercial idea in a short, snappy ‘elevator pitch’ is the first test of its viability as a workable business model.
Can you, in one paragraph, summarise where your business will add value? You’d be amazed how many businesses can’t.
But it’s a crucial test of how well you’ve considered the commercial elements of your idea, and to make your pitch work, it’s got to contain all the key benefits in one concise sound bite:
- Tell your audience how your product/service solves their problem
- Tell them how you do this in a brand new way
- Tell them how solving this problem adds value for them
For example; ‘Is your design agency struggling to post new blog content? Let our content marketing agency write the content for you. You spend less time slaving over a Word doc, and get time back to focus on being creative for your clients.’
Know Your Audience
Your business idea may be the best thing since sliced bread in your eyes, but does your intended audience agree with you on this?
Understanding your potential customers is vital if you’re actually going to make any money from your new creative business – so with that in mind, make sure to:
- Research the market and find out if you have any competition.
- Talk to potential customers and pay attention to their feedback on your idea.
- Check on the size of the local market – are there enough potential clients?
Budgets, Costs and Finance
Working out the financial model that underpins your business idea is critical – if you can’t make money from your business, then you don’t really have a business.
Work out what it will cost to deliver your service. Understanding the impact of payroll, overheads and production costs on your end margin is all part and parcel of building your business plan – and making it work and deliver profits over time as well.
- Think about upfront costs you’ll incur for computers, software and equipment
- Work out what it costs to deliver an average project from end to end
- Write a clear budget for each area of the business (and include targets)
- Consider overheads and immovable costs like utilities and subscriptions
- Come up with a realistic price point and a margin that will deliver a profit
There’s also the question of how you’re going to manage the financial side of your creative business. To make your financial management run smoothly, there are two key steps it’s advisable to take:
- Get a good accountant and business adviser in on the project from the start.
- Set up cloud accounting software to manage your finances and reporting.
With both of these elements in place, you’ll be in a far stronger position to keep on top of costs, spending and budgeting over the life of the business – and have the ear of an experienced adviser to guide your decision-making as well.
Create an Amazing Business Plan
You may have been thinking throughout this ‘hold on, we’ve not actually written the business plan yet’ – and you’d be right. But the business plan you DO write will be far more rounded, far more convincing to investors and far better able to deliver on your goals if you go through the preceding steps FIRST.
With your business idea fully defined, your market researched and your whole business model costed out and budgeted in your accounting software, you’re now ready to create a razor-sharp business plan.
This is where having a business adviser on board starts to add some genuine value too; with the experience and commercial expertise of your accountant behind you, your plan will deliver on the numbers and the underlying strategy.
So what makes your business plan great rather than just good?
- Make your business idea clear – keep the explanation tight and don’t waffle
- Show that you’ve done your homework and include your research
- Make sure your financials are absolutely watertight
- Show all your budgeting and how money will be spent
- Demonstrate to potential investors how they’ll get their return on investment
- Include a clear timeline for meeting milestones
Build KPIs and performance management into the business
So you’ve written your business plan. That’s the end of the process, right? Wrong! The business plan is actually the start of an ongoing process and a document that will evolve and change greatly over the course of your business journey.
And where you really do move away from ‘winging it’ to ‘owning it’, is by building performance management into the business plan from the start.
Key performance indicators (KPIs) are what help you and your business adviser to keep a razor-sharp eye on the development and performance of the company. Having the right metrics set up in your cloud accounting software will give you regular, real-time management information and reporting to work with.
So, what are some of the core KPIs your agency should be focusing on?
- Net profit per job and month – have metrics in place to measure the profits you’re making on each project, and keep tabs on these regularly.
- Team satisfaction – not everything is about the financials. Measuring the engagement of your team is just as important: they are your business.
- Customer satisfaction – equally, monitoring your customer satisfaction is vital. Meeting expectations and delivering the right value builds relationships.
- Value of your lead pipeline – turning leads and enquiries into sales is what pushes cash into the business. So knowing your potential pipeline is crucial.
You can find out more on agency KPIs in our recent blog post
Keep on Top of Your Business Plan
If you’re thinking of starting your own creative business, or you’re currently running an agency on a wing and a prayer, you’ve now got all the tips you need to turn around the long-term fortunes of your agency.
Ditch the ‘back of the napkin’ plans and the hastily cobbled-together spreadsheets you’ve been using to manage your accounts. Do your homework, think about your underlying business model and get a business plan down on paper that provides a genuine route map for your future.
If you’d like to sit down over a coffee and talk through your strategic business plans, we’re always happy to talk shop over a cappuccino.
