Written by Tom Ewer on 23 September 2013
We all know the importance of forward planning -- especially when it comes to business -- but many entrepreneurs and small business owners fail to prepare even the most basic of business plans.
Although much of the popular current advice seems to be, “Just do it”, deliberate action based upon quantifiable goals is far more effective than potentially misdirected efforts. In short, you can’t beat a (wo)man with a plan.
In this post I’ll be discussing why having a business plan is good for your company and provide an overview of the elements it should include.
What Should a Business Plan Cover?
Your business plan can be as simple or as in-depth as you need it to be. The kind of encyclopedic, statistic-filled report required by banks and other lenders and financial organisations are rarely relevant to lone entrepreneurs or small business owners. A simple overview of your business can be enough to help you reach a greater understanding of its machinations and run things more effectively.
As well as being a resource you can use to introduce your business to potential clients, a written description of your business will allow you to easily share your vision, strategies and methods with other partners, employees and any outsourced staff.
In one study, the Kauffman Centre for Entrepreneurial Leadership found that companies with written business plans had 50% greater sales growth and 12% higher gross profit margins than companies without plans. The conclusion? Understanding your business inside out and coherently setting out a strategy for success are both key elements of progress and accomplishment.
Any good business plan should broadly consider these fundamental areas:
- An analysis of your industry
- Who your competitors are likely to be
- Who will comprise your target/ideal customer or client
- Exactly what services and/or products you intend to offer
- How you will market your business (launch and continued)
- Any problems you may encounter and how you would deal with them
By gaining an understanding of these elements you will be better placed to consider the financial components of your business plan. Budgeting, setting out costs and projecting profits early on will help you immensely by providing measurable and calculable figures for reference as you grow your business.
Seeing the Bigger Picture
Many business owners often put off writing a business plan until after they have commenced operations or when they need to approach a lender, potential partner or client. Writing a business plan can seem like a laborious, time-consuming activity, but having a written course of action that can be referred to as and when needed can help to keep your business on track.
Your business plan doesn't need to be a fifty-page document filled with pie charts and graphs, but setting out your goals in a clearly defined manner will give you a good idea of where you’re at, where you want to get to, and the steps you need to take to get there.
Regardless of the ultimate goal, most self-employed people are united in the fact that they gave up regular employment to pursue a better work-life balance where there’s more free time for family, hobbies, or other interests.
In any type of business, goal setting is important as it keeps you focused and motivated to drive your company forward. Taking time to sit down and think about your overall goal and then defining it in a written format instantly makes it quantifiable, achievable and real.
Clarifying your vision for the future of your business on paper will help organise the required plan of action in your mind. You can create a series of benchmarks you want to achieve and frame them within an attainable timescale.
Ordering your aims and objectives into short term (i.e. next six months) and long term (i.e. next two years) goals is key. Regularly revisiting your business plan to review and revise it as your business needs evolve, will assure you that you’re following the right path and achieving the necessary objectives required.
The core value in a business plan lies in the business planning process itself. Business planning is an essential process of running any successful business and preparing for the future – however uncertain or incalculable – can help safeguard your company.
A business plan is not just a document, it is a useful analysis of your company and a road map to achieving success and attaining your end goal. It is a manual you can refer back to for reassurance in lean times or when things go wrong.
It is so easy to forget where you’re headed and lose sight of your original objectives when you don’t have a clear, concise plan so take the time to document your aspirations and outline your goals. It’s never too late to write a business plan or re-evaluate your original one, so why not give it a try? It could just provide the clarity and motivation needed to take your business to the next level.