Business planning is an often underrated and misunderstood task. For some, it can seem daunting and feel a little like having to do your homework. But tackled with positivity and the right support, a business plan can be a helpful guiding tool for business growth and success.
It’s rare that any small business starts with a clear business plan, typed up and laminated on the office wall. More often than not, business plans stem from an inspirational idea hatched over drinks, or involve a handwritten note on the back of a napkin at dinner. But in order to grow from even the humblest of beginnings, small business owners need to have vision and direction. If you don’t know what you’re aiming for, you can quickly end up lost and we all know that being lost takes its toll on both the driver and passengers on any journey.
Where’s the best place to start with a business plan?
A business plan need not be onerous, nor need it be painful to produce. Like its colleague The Elevator Pitch (you have one of those, don’t you?) it should simply tell its readers what you do, where you’re going and how you’re going to get there. Whether it’s just for you and your immediate team, or you’re looking to use it for business planning, financial structuring or more, it’s a vital part of your business.
Although all businesses are different (ideally!), business plans are most helpful when they follow a basic structure. Of course, the details will depend on where you are in your business, how many of you there are and how much time and effort you want to put into it. But as an outline structure, you’ll want to consider the following areas:
- Business strategy and goal setting
- Plan writing, including market overview, company background, marketing plan, SWOT analysis, markets, competitor analysis
- Cash flow forecasts
- Profit forecasts
- Exit strategy
Although these elements might feel overwhelming, with the right guidance they will become an incredibly useful guide for your small business. For example, with a clear budget and cash flow forecast, you’ll have a sound idea of where you will expect your finances to be. You might be tempted to invest in a new product, but if it’s not accounted for in your business plan, then you’ll need to reconsider your plan and potentially save yourself from embarrassing cash flow issues later down the line.
How do you make it future-proof?
Conversely, the benefit of a flexible business plan will enable you to capitalise on any business opportunities that you perhaps weren’t expecting. The difference that a business plan makes, is that you can adjust it, adjust it and adjust it again, but it will always need to balance and make sense in the end. Think of it as a best friend for your business, or a nan with your pocket money. Sure, she’ll lend you some more, but you’ll know about it and you won’t get away with messing about!
Your plan should also be flexible enough to present easily to different audiences. If you are looking for investors, you’ll need to ensure that you’ve outlined your growth strategy clearly, as they’ll be looking to see evidence you’ve planned for growth. If you’re talking to lenders for a business loan, they’ll be less interested in the high risk returns and more on the backing of the business and assets held (for example your home).
As with all plans, timing is key. Write your business plan early on and be ready to change it as your advisors and investors grow. Ensure that your plans are bound by targets and time-lines, otherwise you won’t have a clear idea of what success means to you. Is it to reach a certain number of customers in year one, or to hit a certain sales target? Is your five-year plan to invest across a new border? When are you aiming to break even? While financial success is of course essential, your targets may also include other essential aims, like environmental goals, or what to do with the business when you want to move onto the next project.
Once your plan is written and approved by your business partners (and your investors if you have any), you must continually measure and monitor progress. Watch out, too, for the winds of change. It’s one thing growing faster than your competitors, but another if they’ve all changed tack and they’re growing in another direction, you’ll be left behind at least and at worst lost at sea. But if you’ve got a map, you can find your way back – at least to the start line and realign your business. Flexibility is key. And a good sense of direction.
For help with writing any aspect of your business plan – or even a sense-check before an investor meeting, please get in touch with us at FD Business.
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