“In the business world, the rearview mirror is always clearer than the windshield. ” – Warren Buffet
There are a few reasons you may need a business plan
If you’re starting a business
It’s crucial to have a business plan at this stage as you need to make sure you have a viable business model before you start. And it’s a vital step many business owners miss out on.
A business plan covers what you are selling, to whom, what problem you solve/what outcome you give to your clients or customers.
It outlines your product or service offerings – what they are, what you are going to charge for them and how you are going to sell them.
The plan also looks at how your business is going to run – who do you need to run the business. But if it is, how will you juggle your time between sales, delivery, admin, marketing, finance and the other 120 things you need to do run a business?
How will you finance it? Do you know how long you can last before you need financial support, or before you break even and start to make a profit? (Hint – it’s a lot longer than you think!).
What are your sales forecasts, and are they sensible ones or bonkers ones like they come up with on the Dragons’ Den.
How much is it going to cost to run your business? There are lots of costs you need to consider, particularly if you are selling products. You need to understand your profit margins, both gross profit and net profit.
Far better that you understand what you’re getting into before you start. Having a good business plan will give you that reassurance.
Growing your business
Yay! You’ve survived the first couple of years, but you’re now at the point at which you need to grow and this may mean taking on staff, moving into premises, increasing production.
All of which takes money. So it may be that you now need to raise some finance to support your growth plans. In order to raise money, you need to convince people that your business is one that is worth the risk of spending money on. Whether it’s taking on a business partner, or looking for cash flow funding, or borrowing money to build a plant.
Selling your business
You’ve got to the point where you’re looking to exit your business and you want to sell it.
You need to have a plan in place to make that happen. There are many factors that make a company sellable. You need a plan that shows your success against each one. This will help to persuade others that your business is worth buying at the price you want to sell it for.
This needs a slightly different plan because you need to show others that their investment is worth it. Can you show that you have the right team in place, do you have a solid pipeline of clients and business, if you sell and leave can the business operate without you and so on.
A business plan has many benefits
- It helps you get clear about your goals and where you want to take your business
- It identifies clear milestones of what needs to be done by when in order to hit your goals
- Can be shared with your staff so they all understand what the aims of the business are. They can also feed into it so you get buy-in from them
- Shows external people that you are serious about your business and that you understand it inside and out
- If you want to sell, it’s a great tool to showcase your business
Want to know more? I run Business planning workshops, or I can work with you one to one to develop your business blueprint.
Nick Tasquier – Owner at Redwood Financial Service