Your guide to business planning
What is a business plan, and why is it so important?
A business plan is a document that allows entrepreneurs to track set goals and objectives to see if their business is heading in the correct direction. Writing a business plan doesn’t have to be a huge document; instead, it can be a tool or map to track the specific milestones that you want to reach.
Within a business plan, it highlights how you will achieve those goals and objectives, who is responsible and the overall entailed costs. Business plans are so essential that there is a 30% faster business growth rate with those who create and use one than those who don’t, so it’s important to incorporate one.
We’ve highlighted some of the main steps to improve your business planning:
How to improve your business planning
Break down your long-term goals into smaller, short-term goals
You may think that only setting a long-term goal is the correct way forward, which for some businesses, it may be. However, breaking it down and setting short-term goals to reach that end milestone will actually have a more successful impact, and the chances of achieving that long-term milestone increase vastly. Breaking down those long-term goals also helps employees and everyone on the team to understand what specific next step needs to be achieved.
Create a clear timeline
When creating a business plan, there needs to be a timeline with dates/times for when you want that specific task or goal completed. A set timeline organises and highlights what needs to be done, enabling you to delegate tasks to team members and ensure they meet their work. Creating one also stops you from falling behind but gives you reassurance and clarity that not everything needs to be completed right now, preventing you and others from feeling overwhelmed.
Create a contingency plan
Every business can take unexpected turns, throwing you and your team off balance. However, creating a contingency plan that highlights any risks or ‘what if’s’ prepares you for when or if things go wrong. Finding the potential risks and creating solutions, prevents delays to your progress and the unexpected from happening, so it is definitely beneficial to incorporate this when writing your business plan.
Review your plan
When developing your business plan, you must remember it’s a living document, so it doesn’t have to be written and never changed again. As your business progresses, it’s important to consider that your plan must be altered to ensure that you’re still heading in the right direction. There isn’t a specific time measurement for reviewing or updating your plan; it all depends on the alterations within your business; however, it should be reviewed yearly at a minimum.
The benefits of business planning
Plan future steps
Creating a business plan allows you and any investors an insight into whether your business will or has the potential to be successful. You can spot any strengths and weaknesses within your ideas or future projects by mapping them out within the business plan; this can prevent you from going through with something that could cost a lot of money.
Prioritise tasks
With you laying out many future goals and writing the tasks needed to reach those goals, you can begin to prioritise these. You can keep track of the most critical tasks that need completing, allowing you to allocate time strategically.
See a clearer view of the business
When everything is laid out in front of you in an organised way, it’s very clear to see the overall look of a business. You may find yourself looking into your target audience and questioning whether it needs to be tweaked, or maybe you’ve spotted that your products aren’t aligning with your target audience’s needs and could be improved further. Everything is clear and concise within a document and allows you to pinpoint areas that need improvement.
Track cash flow
For any business, cash flow is significant, and tracking it is just as essential. A business plan should always include cash flow forecasts and analysis, showing yourself and any potential investors how much money is expected to travel in and out of your business.
Stay organised
It’s imperative to stay organised within a business as so much is happening, which can overwhelm you. A business plan allows you to see things clearly, with everything laid out, and organisation is one of the main benefits. You can track and adjust some aspects of your business that may need changing.
Why you need a business plan
Although it’s clear that a business plan has many benefits, it’s also essential to understand why you need one for your business.
Business milestones
Every business will have some milestone they want to reach; these can be long-term or short-term goals that will bring the most success. Having these laid out clearly within a business plan with strategies and step-by-step guides on achieving them is very beneficial. You will more likely reach a desired milestone if it is written down clearly.
Reduce risk
When starting a business, there are a lot of risks. A business plan identifies many questions that need answers, does your product fit your target audience’s needs? Will your business model generate sales? What strategies do I need to gain the most profitability? Those questions will make you realise that some adjustments must be implemented.
If you already run a business, the questions above may not apply to you. But, you can still identify risks and ask yourself if you have got enough employees to maintain your workload? Are you on track to meet your goals? A business plan is an open document, so ensure you are still reviewing and updating the plan.
Get your team all on the same page
It’s essential within a business to ensure that all team members are on the same page and that they know the goals for the years and the steps that need to be taken to achieve those. In a business plan, you can highlight very clearly the next steps for a business, allowing everyone to be aware and on the same page. When updating or reviewing the document, share it with your employees; this means they won’t ever be out of the loop if new adjustments are made.
Understand your competitors
A business plan gives you a deeper insight into who your competitors are, forcing you to analyse their current position and how you compare. Highlighting your competitive advantages is essential; you want to know why your product specifically stands out, and having this written down clearly in a document, means you can always refer back to it.
How to write a business plan
Now that you know everything, what is included in a business plan?
Executive summary
This is the central part of any business plan, this should summarise the critical element of your plan, so it is commonly written at the very end. You want to summarise the company overview, customer and industry analysis, marketing plan, financial plan, who your team are and anything else you wish to include.
Company description
Who are you, and what does your company do? Those are the questions that the company description should answer. You want anyone to be able to open up your business plan and understand exactly what your company do, down to the specifics, like your competitive advantage, and why you started this business in the first place. Having it written down clearly can clarify everything you need to know; this can even be your principles or mission statements.
Market analysis
A market analysis is essential for any business step, as it can constantly change. You need to analyse the market your product will be positioned in, as this can make or break the success of your business.
Look into how big your potential market is, research your target audience or who you want them to be, look into your industry and what is currently trending within that, and make well-informed guesses and decisions. You aren’t going to get everything right when executing this analysis, but as long as you are aware of what market you are entering and the risks/strengths associated with this, you will have a higher chance of success.
A SWOT analysis is an excellent method when entering a new market; this stands for strengths, weaknesses, opportunities and threats; by identifying all those points, you can see clearly whether you are entering the correct market.
Products and services
It’s essential to have a section that clearly outlines what products and services you offer and provide necessary details about each one. Be sure to mention any future ones you have planned to release and the positive impact this will have on profitability.
User benefits
One of the main sections within a business plan is the benefits your consumers will gain from using your services and products. Clearly highlighting exactly why your products/services satisfy their needs enables anyone who views the document, whether that’s you, an investor or someone who works on your team, allowing them to see exactly why that product is or will be successful.
A business plan is the key to success
A business plan enables you to successfully identify the next steps for your company to take going forward, even if its purpose isn’t for investors; it’s an excellent tool for identifying gaps that can affect essential elements of your business. Whether this business plan is for a new product you’re launching, wanting to grow your business or analysing it as a whole, you now have a working guide to reach your business’s new goals.
FAQ
Is a business plan essential?
Although not mandatory, a business plan is essential for sustaining success within your company. A strong business plan not only helps an organisation focus on the next steps to take, but it can also help to achieve any set goals, short or long-term.
What does a good business plan look like?
Although there is no clear answer to define a ‘good’ business plan, as all businesses are different and set different goals, one should start with an impressive executive summary, competitor analysis and a well-detailed product and services list. Ultimately, you know you have a good business plan when your goals and objectives are met.
Are there different types of business plans?
Start-up business plans: This type of plan is ideal for new businesses and includes a company description, product and services, market analysis, and management team.
Internal business plans: This type of plan is usually targeted towards a department within the organisation to propose a new project. Internal business plans typically include the current state and position of the company, project marketing, and market analysis.
Strategic business plan: This plan is about the company goals and how they will be achieved. Commonly these plans include a mission statement, company vision, and strategies to achieve specific objectives. The sole purpose of this plan is to summarise the company and put it into one clear picture, bringing employees closer together.
Feasibility business plan: This will include the need for your products and services, how they will reach your customer’s needs, and the target market, most feasibility plans will typically end with recommendations.
Growth business plan: These are written for internal or external purposes, and include descriptions of the proposed growth. These plans will typically include descriptions of the company and the management team.
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