How to write a business plan that works!
If you’ve ever sat down to write a business plan you may well have hit a brick wall of uncertainty: where do you begin, what sections should it have, what period should it cover?
As is so often the case, there’s no one answer to these questions and each plan is as individual as the business concerned. However, by following this simple framework you will be able to create a plan for your business that’s both clear and practical.
This is the most important part of any business plan: setting your objectives. After all if your objectives aren’t clear then there’s no point in planning at all. Everything else that follows in your plan has to be part of the process of achieving those goals.
So, you may be aiming to increase sales, expand into a new market, or launch a new product or service. You could be setting up a new business from scratch and your object is survival; it may be that you’re in a difficult market and your sole aim is to stop the company making losses. Whatever it is you want to achieve, having clearly stated aims is of paramount importance.
2 Time Frame
Once your objectives are set then you need to establish a date by which you would want to achieve them. Many business plans are set up to cover short, medium and longer terms; equally it could be for one financial year.
If your plan is to cover a long period, say five to ten years, it’s a god idea to add a detailed, shot-term plan as part of this larger framework. This is because the more distant the finishing point the more difficult it is to anticipate problems and work out how you can deal with them.
Once you know ‘what’ and ‘when’, it’s a matter of ‘how’. So, you want to achieve 20% sales growth over a two year period, how are you going to do it? What steps do you need to take to make this happen? Or perhaps you want to break into a new market, what parts of your business need to change? What additional resources do you need, where will you get them from?
‘Resources’ doesn’t just mean finance: it’s also people, time, expertise, equipment, capacity. In fact it’s everything you need to put in place to achieve your objectives in the given time frame.
Let’s say your objective is to increase sales by 20%. You will need to look at:
- Quantity How much of your products/services do you need to sell to achieve your objective?
- Marketing Are you reaching a sufficient audience? Does your marketing activity need to increase or change?
- People Do you need more/different staff to sell your products/services? Do they have the right skills or is training required? Will you need extra admin or productions staff to cope with the extra volume?
- Physical Do you need to buy new stock/invest in plant/open larger premises/get new computers etc?
Now that you’ve established ‘what’, ‘when’ and ‘how’, the final piece of the jigsaw is ‘how much?’ Will you require additional funding to achieve your objectives? Is there likely to be a strain on existing cash flow? Ultimately, will it be profitable?
At the very least you will need to know that you can afford to carry out your plan, and if not how you will obtain the necessary finance. Finally, if the plan requires loan finance, will you generate enough cash to meet the repayments?
Writing a business plan isn’t easy, and will require an in-depth examination of your whole operation. But a well written plan will help you to achieve your objectives and by following these guidelines you will be able to do this for your business too.