If you don’t plan your journey, how will you know the right way to go? Here’s how you put together a business plan that works.
In November of this year, Recruitment Entrepreneur hosted an Investment Den at The Business Show at London’s Excel. It was a fantastic event and it was a real pleasure to meet so many entrepreneurs pitching their recruitment businesses and platforms.
While we met several visionary recruitment business owners with well-thought-out strategies for success, it was a shame to see some hopeful entrepreneurs who lacked the understanding of how to write a robust business plan. There are so many benefits to having a business plan, including:
- Setting your goals and ambitions for the business
- Keeping you on the path and helping you make better decisions
- Demonstrating your business idea is viable before you sink time, money and energy into it
- Supporting stakeholder and investor confidence
- Setting objectives and communicating them to your future team
- Illustrating your depth and breadth of industry understanding
You wouldn’t go on a long journey without a satnav (or map if you’re old school), so why choose to try to find your way to success without a plan?
How to structure your business plan
Here’s a guide to writing a robust business plan, using our outline as a structure to follow:
Your recruitment and management experience
When an investor is evaluating the opportunity and your business, they are looking at you as much as they are looking at your idea. They want to see that you have what it takes to lead a vison and team to success and can run a tight ship. Write a paragraph about your background in recruitment and your experience in management. If you have partners or a leadership team with relevant backgrounds, include details on them also.
Your vision for ____ (your business)
Your vision is your ‘why’. What do you want to create and why do you want to do it? This is the part of your plan where you show what will make your business different from everything else out there. After all, if you’re not going to be unique, what’s the point? Your vision is also your north star to guide you when you have difficult decisions to make.
Market opportunity and competition
You need to show that you know the market you want to operate in inside and out. Use statistics and real numbers to show how you expect to fit into the market. Think about who your customers will be and how many you need to win to achieve your goals. You must also think about your competitors. What are their strengths and weaknesses, and how will you compare to them? When you take a realistic view of your market and competition, you quickly see the viability of your business (or not).
Recruitment services, likely average fees and margins
What services are you going to offer? It sounds obvious, but you’d be surprised how many business owners take it for granted. You need a niche in which you are going to build a foundation. Then, what are you going to charge for your services? What will be an average order value and how much profit do you make on that? If you don’t know that before you start, you will probably end up charging your clients too much or too little. Either can be a disaster.
How are you going to sell your services? You have worked out who your target customers are, but how are you going to reach them and turn them into raving fans of your business? Be as thorough as you can with the numbers. Lay down a plan for targets for the first 3-5 years. Think about how many salespeople you will need to hire and the channels they will use. Show your understanding of the sales approach, channels, barriers and opportunities in your market and the key conversion metrics for success.
The amount of investment and support required
If you are pitching for investment, you need to have a specific amount of money in mind, and clarity on what it’s needed for, as well as what you are offering in return, that’s the ‘why’ for the investor. It will show investors your plan for the business and how you see your marketing and sales strategies performing. You also need to think about what you will need from investors and importantly what’s required beyond money. Can they help open doors in your market? Help you navigate the many hurdles, barriers, pit-falls and dead-ends that sadly become the demise of many start-ups.
How you will use the investment (financial and operational)
Investors want to see what you will do with their cash. The investor relationship is special because equity offers immediate benefit without the challenge of increased costs (debt) but this requires a very high level of trust in you, and your capabilities, so make sure you start and develop the relationship with this in mind and think hard about how the cash is going to pay back you and the investor x3, x4, x5.. Whether it is to hire more sales reps, create a new division, create a sustainable growth model or any other project, you must specify what it is and how it will help grow and sustain your business to provide the payback to all.
Financial and headcount projections for the next three years
What are your financial goals for the near future? What do you expect to achieve based on your marketing and sales strategies and your market insights? These numbers should be traceable back to everything you have set out so far. You should also set out your hiring plans. How many people do you intend to hire and in what roles?
Headline financials – GP/EBIT over the last three years (for existing businesses)
If your business is already up and running, how has it fared so far? At what rate has it grown? How profitable are you? What are your honest projections and what assumptions underpin these?
Start with the end in mind, stake your claim for your ‘Why’!
Starting a business is an exciting event, which requires deep thinking, ambition, detailed planning and great preparation to ensure that both you and the business will be a success and ready for the cut and thrust and challenges of working outside of the protection (or perhaps hinderance) of the corporate world. But before you do this, ask yourself why? Knowing why provides the drive to ensure you stay true to your dreams, stake a claim for your why and build the right business. The industry is full of life-style businesses with owners that enjoy the freedom of a non-corporate life but have businesses worth nothing, except to themselves. That’s not a place for investors, so know your why before you think about investment and be honest with your ambitions.
When you put all this in writing, your ideas become crystallised. Potential investors, team members and anyone else can quickly see the value of your business.
Don’t be a lost soul in the recruitment industry. Create your business plan today.
Find out more
We’re looking for current or future business leaders that want to scale their own recruitment business in 2020. Is this you? We can assist you in setting up your own recruitment business, or help you scale your existing business to a highly profitable exit.