If you ask any business coach or mentor what they feel should be the first step when starting a business, there is a very good chance they will talk about a business plan. Worryingly, the business plan has become noticeably absent from many start-ups’ to-do lists, and appears to be seen as nothing more than a tool for securing funding, something not all new businesses feel they need.
In reality, the business plan has a far more important role to play. Rather than seeing it as a tool that appeases the bank, view it as an internal manual for your business. Even if it is just a means of documenting your financial projections, or the first stages of an idea, it can bring clarity to your objectives.
View it as the satnav for your business. When you start your journey, you choose a route. However, as you progress, you may be diverted or find a shorter path. It could be that you are forced to head in a completely different direction, but by simply updating the satnav with this new information, you can clearly see the road ahead. The same applies to business plans.
What should be included in a business plan?
As well as those who misunderstand the importance of a business plan, there are others who actually find the whole idea quite intimidating. Where do you start? How do you know what you should or shouldn’t be projecting or documenting? Honestly, every business plan is, and should, be unique. It is about formalising the things that are important to the successful running of your business, and predicting what steps will need to be taken in order to grow.
Below we have picked out some of the reasons we believe it is vital you have a business plan. We hope, that by reading through the reasoning behind the practise, you can begin to see what elements you should include.
Understand your market
A business plan can be a self-examination of exactly how much you know about your industry. Where do your fit into the market, and who are your target audience? A successful business will be able to hone in on exactly who they will be selling to, and whether there is a niche to be taken advantage of. This may change as the business progresses, (as should your business plan) but having this central vision is important.
Calculate the numbers
A business plan enables you to formalise the financial aspects of your business. Talking through the numbers, or noting them down on a scrap of paper, will never enable you to get to the route of your financial plan. Predicting a certain number of customers, or the amount of turnover you want to achieve within a certain period of time completely disregards the ‘how’.
To achieve that amount, how many customers do you need to sell to? To cater for that quantity, how many staff do you need? How much money does the company need to have earned before you are able to pay that number of employees? Questions, lots of questions, need to be answered. Your business plan is the end result.
Attract talent
They aren’t many things more persuasive to a prospective job candidate than a well written business plan. Talented individuals will always be keen to understand your business before committing to it. If you are vague on your direction and ambition, then it could be enough to force the candidate to look elsewhere. Being able to hand over a written accumulation of your achievements and track record of meeting goals will fill a prospective employee with confidence. Not only do you dream big, but you deliver too.
The very best employees will repay this commitment in kind.
Hold yourself accountable
If you are the classic ‘one-man-band’, or have a small workforce under you, then a business plan can be especially beneficial. It forces you to create a long term vision and to strategise your company’s rise. If you aren’t meeting these aims, the business plan can jolt you into action, in a way that perhaps you wouldn’t be able to do alone or with less confident staff. It is important to track your progress and hold yourself accountable for every decision. If your business plan doesn’t do that, who will?
Exactly what will go in to a business plan will vary from company to company. The first step is to just start writing. Anything that you view as critical to your success should be carefully thought through and documented. The business plan should evolve as well. Don’t let it feel restrictive, treat it more as record of goals you have achieved and a set of plans for the future.
