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To secure finance. No sensible lender or potential investor will part with their money without seeing one.
To improve the business. A properly conceived plan is a major management tool that can be used to secure fabulous results.
Most business plans are probably written to help secure funding but business improvement is without doubt a more powerful use. A properly conceived business plan will help secure the needed finance and will guide the management team to the riches they desire. It is also the case that business plans designed primarily to improve business performance, are more likely to secure finance.
Running a business is very similar to being a general faced with a military campaign. If he decided not to plan for the battle and just hope for the best his side would be at a massive dissadvantage when pitted against a leader who had planned metriculously. That is not to say that the battle would progress exactly to plan because the enemy is doing his best to thwart his opponent's plans. The successful general is flexible and reacts quickly to what theenemy does and tries to predict in advance what that may be.
In business the competitors are the enemy and the customers the territory. The written plan is nowhere near as important as the planning process. The written plan merely sets out as simply as possible what has been decided during the planning process. It should be a constant point of reference during the battle but is reglarly tweaked as circumstances change.
Beware of Business Plan sotware and templates that offer "boiler plate text" that you just personalise to suit yourself. That can lead you into preparing a good looking written plan, but missing out on the essential process of planning entirely. The result of that could be a valueless document which does not stand up tp scrutiny. Lenders do have the habbit of asking awkward questions!
Below are the basic steps to go through if you need to build a business plan. Use it as a business plan checklist or as a general guide to writing a business plan. If you need a business plan consultant; we have been helping people prepare brilliant business plans for the last 20 years. We can do it all or just help you with some of it.
Where are you now?
If you have made plans in the past how did they work out?
How has the business done well and in which ways has it done poorly? Why is this so?
How have you performed against your key performance indicators?
Analyse financial performance
Analyse quality performance
Analyse customer satisfaction and retention.
What are the reasons and how could future performance be improved.
Review the business landscape by analysing conditions in which you and your competitors are operating.
Analyse your industry
Look for market trends
Analyse competitors
Analyse customers
In light of this what changes do you think may be needed?
Generate your SWOT (Strengths, weaknesses, opportunities, threats). It is a fantastic tool for developing competitive advantage. It identifies what needs working on and what needs capitalising.
Are you a visionary? Can you see where the business is headed? Is that where you really want to go?
Your top team will definitely be involved, but ideally everyone should have a say. A good vision will set the direction, give people a sense of purpose, and set out the values which determine the way they behave. Avoid platitudes which are utterly meaningless.
These are the long term business performance goals that support the vision.
The actual time frame depends on the individual business
A typical horizon is 3 to 5 years
Having determined where the business is now and where it wants to go, managers need to work out how to get there. It involves the creation of competitive advantage to increase profit. It is important that the choice of strategy lines up with the strengths of the business. The business then needs a set of strategies to deal with the forces acting against its ability to generate profit, such as competitor activity. The chosen strategies should help the business achieve its corporate objectives.
Strategy is not just marketing. It involves the whole business. Everyone needs to be involved in the development of it. Everyone in the business should be working to strengthen its competitive advantage.
These are operational plans. They contain:
Long term plans which line up with the corporate objectives.
Short term plans. Usually 1 year in duration, they have specific objectives and detailed action plans setting out how they will be achieved.
There are a number of different operational plans. Which ones are developed depends on the needs of the business but at least the following would normally be included:
Marketing Plan
Finance Plan
Operations or production plan
People plan
Set it all out clearly and succinctly so that it is easy to follow.
If you need funding explain what is needed and why. The financial forecasts are crucial as funders need to be convinced that they will get their money back.
Every member of your team should get the opportunity to discuss the plan one to one with their manager and / or in team meetings. Everybody should know and agree with what their contribution will be.
All objectives should be specific and dated, so you know when the time comes whether you were successful. There should also be milestones along the way that create points in time where the objectives will be reviewed. If you are not on course there may still be time to take corrective actions that are designed to ensure the goal is achieved on time.
For as much or as little help as you need contact us now.