Debbie Austin FCCA explains the importance of business plans and 8 ways to ensure yours is heading in the right direction.
Everyone wants the perfect business; a money making, well oiled machine that’s leading in the market…if only it were that easy. As a potential business owner you will set goals around things like profitability, productivity, and growth (just to name a few).
In order to reach these goals amidst the daily meetings, phone calls and e-mails, you’ll need to create an effective business plan. Starting a business can be a complex process and that’s why a business plan is important to the success of your venture, your plan will map out all of the details surrounding your business.
If you’ve already started up or you've got a growing business, congratulations! Reviewing the key components of your plan can help you avoid crisis situations. Remember, your document is at the core of all that you do, it will help you achieve your goals and that's why we've written this post on how to write a business plan.
Here are 8 key components that you don't want to forget when creating an effective plan off the back of your business idea:
1. Summarise the 5 "W"s to create your summary
Even though this is placed as number one on our list, it can easily be the final stage because sometimes it's easiest to write your summary after you've already ironed out all the other details. This summary is an overview of your entire business and the elements surrounding it.
Why does your business exist? The role of your mission statement is to answer this exact question. When you encounter a cross road in the business you'll need to make a key decisions and you’ll find the answer using your mission statement.
Think about why you started the business along with where you would like it to be in the future, how will you get there? Your mission statement is the start of creating a culture that people in your organisation will live and work by. Business is about relationships and good culture is the key to building long term successful ones.
3. Know your market
You've come up with this great business idea, but how will it do in the market? Or, more importantly, is there a market for it? Does it have the hallmarks of disruptive innovation? Putting your idea to the test is an important step in your process when you're planning for success.
This is the time to research and determine who your target market is and ask specific questions that relate to your product or service. What have others done before you and what can you do differently and better? Analyse what information you've uncovered and outline it's possible effects in your business plan.
4. What is your SWOT telling you
Create a detailed list of your strengths, weaknesses, opportunities and threats. This needs to be done with an open and honest approach, keep emotions out of it… focus on being objective when analysing your business. Any strengths you uncover will represent internal, positive factors in your business that are within your control.
Weaknesses on the other hand will address internal, negative factors that need to be improved. Both opportunities and threats are external factors; while opportunties will positively effect the success of your business, threats represent negative factors beyond your control that could harm your business which you will want to strategise for in your plan.
5. What's the plan?
Developing a plan is all about improving the business in a positive way; how do you know what needs improvement? You can always start with addressing your SWOT. How can you maximise your strengths, correct your weaknesses, make the most of your opportunities and nullify any threats?
Remember that you can’t do it all yourself (there’s no ‘I’ in team), so get the staff you have involved with the tasks on hand by delegating responsibilities. If you're feeling a little stuck when writing your plan you can find a great template here courtesy of Hubspot.
6. Let's talk money: Creating your financial plan
Ideas are great, but how will you make them a reality and sustain a viable business. Creating a financial plan will give you the opporutnity to address your financial concerns and talk money, think about start-up costs, financial projections, funding and investor pitches.
You'll need to list how much your start-up will cost, everything from stationary to leases should be outlined and balanced against your financial projections.
7. Put it on paper
You’ve done your reasearch and put together all your notes, now it’s time to write your plan. Include all the “who’s, what’s, whys and when’s” into one cohesive document that incorporates your mission statement, SWOT analysis, goals and plans, and budget.
Make it clear who will be working on each task. If you feel like something’s missing, encourage input from key staff members and those closely involved in the business.
8. Don't fear change, your business plan isn't written in stone
It’s important to remember that your business plan isn’t written in stone. This is a document that you and your staff can improve and update as the business grows and changes. Your plan should be reviewed regularly.
Consider implementing a monthly review to track progress or make adjustments to your strategy. Accountability and motivation are key in making sure your goals are met, think about the people involved and what can you do to keep them inspired.