If you have ever sought finance for your business, chances are that the lender required that you provide a business plan, and there’s a good reason for that. The lender wants to know exactly how well thought out your business is in order to evaluate the risk that you may default on the loan. So doesn’t it make sense that even without external pressure from a financier, you should take the time to create a business plan so that YOU get a better idea of your business’ chance of success?
Here are 3 key points to help you create a business plan that will provide direction for the future of your business.
- Plan your plan: Your business plan includes projections of marketing strategies and financial details such as sales estimates and likely expenses. One of the key benefits to you of creating a business plan is that it forces you to sit down and carefully consider how your business idea can be transformed into a successful enterprise – so make the most of this opportunity! Will your idea be profitable? How much will it cost to run? Who are your competitors? What is their likely reaction to your entry into the market? You will need to go into more detail as you work through your plan, but getting an overall feel for how your business can work will save backtracking later.
- Structure your plan: Business plans follow a fairly consistent structure designed to impart the necessary information in an easy-to-understand format. There’s no need to get creative here. Start with a title page that includes details about the business, your contact details as the owner and when the business plan was created and any reviews that have taken place. Next, you will need a Business Summary, but do this at the end once all the other information has been confirmed. A Marketing Plan should include information about your industry, your potential clients and your main competitors, who may be either direct (same business type) or indirect (targeting the same customers with a different product or service). The Marketing Plan should also address how you will target your customers. Future Projections includes your vision statement and the goals that you have set for the business, as well as how you will measure the business’ performance against these goals. The Financial Plan should give details of your likely revenues and expenses (actual figures for existing businesses, realistic projections for new businesses), as well as projections for future years. Finally, add any supporting documentation required.
- Review your plan: Keep in mind that the changing nature of the business landscape will require that you regularly review your business plan to ensure that past targets were met and that future targets are still on track.
By following this process, you will ensure that you have a current business plan if you ever require finance, and you will also have a clearly defined path to success for your business; however, if you are feeling overwhelmed, don’t be afraid to consult a professional.
By Jennifer Lowe