Are you having an internal debate whether your business idea needs a formal business plan to get off the ground? It’s often said that the 5-year-plan (as talked about on Dragon’s Den) is the go-to, but if you’re just starting out, how far ahead is useful, really?
The answer depends if you plan to look for funding from an external source.
If so, you will most likely need one!
The bigger the organisation for funding, the more formalised the business plan needs to be. Whether you need funding or not, even a basic plan is a great planning tool.
Here are our tips on why we think they’re beneficial, and how to get started:
1. Think about who’s likely to read it
If you’re looking for investment from an individuals, or the bank, they’ll be looking for different things. So focus on ensuring the key things they’re looking for are included. A potential investor will be looking for a clear explanation of how they will get a return on their investment. A bank manager will be looking for proof you can afford to pay back a loan (‘service’ it) before they provide funding. If it’s for attracting business partners, they’ll be looking for something entirely different. Just for directing yourself and your team? It is good practice and discipline to lay out the directions, to then turn into an action plan.
2. It’s a good place to do some competitor research
Once you’re in the thick of it, it’s easy to look at what competitors are doing and be distracted. Or be fired up to take them on! Spend the time exploring exactly what sets you apart from them in your business plan. This serves as a great reminder to check in, but not be swayed by what the competition are up to. A good reminder to focus on your business, first.
While doing this it will give you a real chance to think about what you are selling. Also, why you are selling it (the benefit to your client/customer) and how to package your services or product into various ‘offerings’.
3. Get your numbers sorted
So we may be a little biased here, but the numbers are so important.
With only around 50% of small business making it the the 5 year point, a solid financial plan is key to survival.
A recent study has shown that cash flow is the number 1 reason business fail, so understanding and planning out your cash flow is a must.
Predicting your sales and cost estimations are of obvious importance! Get these right and you’ll be flying and in with a chance of being in the happy 50% of business owners at year 5!
4. Nail your Executive Summary
This is a great place to map out your vision – it should be succinct and sell the story!
5. Get someone to check it
In order to get a sense of how the plan reads and to sense check your numbers, getting your plan checked over by an independent professional is a good idea.
Here’s where we come in!
There might be questions that arise that you hadn’t considered – no reflection on your plan not being cohesive at all – more to ensure that you’ve considered all possible angles (especially tax!), before you hand over to someone whose objective is to interrogate the content.
Where do I start?
Here is a great resource that lays out everything you need to get you going: https://www.enterprisefirst.co.uk/services/business-toolkit/
If you need any help with your own business plan, be it for a new business or an existing one looking to refocus, be sure to get in touch.