You may be asked for a business plan if you are looking for investment from a bank or private investor. But whether you want investment or not, a business plan is a vital tool for long term success.
A business plan is essentially a definition of what you want to achieve and how you are going to achieve it. It is a written document of these aims, ambitions and targets. When you write a business plan it is important to be clear, realistic and to the point. A business plan should be a working document so don’t write something that is woolly or convoluted.
All businesses should have a business plan. You could be a startup looking for investment or an existing business, whatever you are a good business plan is crucial. Why? Because it will get you investment and it will help guide and steer your business in the right direction. It will also help drive growth. Interestingly the Cranfield School of Management have estimated that businesses who use business plans grow 30% faster than those that don’t.
The key areas that your plan should include are a statement about what your business will do, what products or services you are providing, how customers will access your products, pricing and what it is you want to achieve-short and long term. There should also be market analysis on your industry, market and competitors, how your business will be organised and managed and a marketing and advertising strategy.
It is essential before you start writing a business plan that you spend time understanding your market. This will help you to focus on your products, customers and competitors. It will also ensure that your business plan is based on well research facts and not hunches.
A business plan could be for investment in which case you need to ensure that it is written for that very purpose. Your plan may in this sense include more on money needed, how it will be used and when an investor can expect to get money back. If you are not looking for investment your plan may be more slanted for you and other directors to provide focus and for inspiration for any employees. The headings of a business plan may be the same but the slant will change.
This doesn’t mean that your plan is light on ideas what it means is that the plan needs to be easy to read and easy to evaluate. So ensure that your sentences are short and make the point. Avoid jargon and buzzwords. Also consider reigning in the prose by using bullet points, but where an explanation is needed provide it. You need to get the balance between crisp brevity and not looking light on the detail. Graphics can also help if you need an investor to really visualise your idea. If it helps consider using charts to show projections e.g.. bar charts, pie charts that again will help investors and employees see what the figures really mean.
A great business plan will show how the business will grow. This is the inspiration that investors need but also employees and other board members. A good marketing strategy should include how you plan to boost sales, introduce new products, retain existing customers whilst gaining new ones, and of course it needs to set a budget on how this will all be paid for. You will need to understand your customers and look at answering questions like why they will buy from you and not a competitor and how you will communicate to them.
Once you have written the business plan then it is essential that it is not filed away and never looked at again. It should be used a s a business tool to essentially keep you on track. Here are some tips to getting the best out of your business plan.
It is useful to revisit the business plan regularly to check whether things have changed. Is there a new competitor in the market that needs to be addressed? Has your customer changed? Or is the strategy still on course and still relevant?
See if milestones have been met, budgets on target, sales looking good. You may have to make adjustments. Changes to sales or spending may mean targets will need to be amended.
If you review your business plan on a monthly basis then you can ensure your strategy is on target or make the changes needed.