- Business plans can be a key driver of growth.
- The business plan is to a new business what a stethoscope is to a doctor.
- It quickly tells you the pulse of your new business idea and whether it is headed for success or failure.
Business plans can be a key driver of growth. The business plan is to a new business what a stethoscope is to a doctor. It quickly tells you the pulse of your new business idea and whether it is headed for success or failure.
Studies have found that companies that write business plans and use them to run their business grow 30% faster than those that don’t.
Existing companies use them to reinforce their strategy, establish performance measures and manage their objectives. A business plan can also be used to track results and plan resources.
Business plans help businesses identify their goals and stay on track. They can also help them start and manage themselves, and grow once they’re up and running. They also act as a way to get people to work with and invest in the business.
Other benefits include the ability to test the product or service and the ability to brainstorm an idea before investing too much money in it.
For existing businesses, a robust business planning process can be a competitive advantage that accelerates growth and drives innovation.
Business plans for existing businesses are dynamic tools that are used to track growth and spot potential problems before they derail the business.
However, the sad truth is that most organizations start working on projects on gut feelings and without preparing a single business plan. No wonder sometimes disaster strikes and we all look surprised and wonder when the rain started hitting us!
Many business people only think about business plans when starting a new business or applying for business loans. But truth be told, every business needs a business plan. However, writing a business plan does not guarantee your success.
You get the most value from your business plan when you use it as an ongoing management tool. When you run a business, you learn new things every day.
You get to know what your customers like, what they don’t, what marketing tactics work and what don’t. Your business plan should reflect these learnings to guide your future strategy.
Therefore, your business plan should be constantly reviewed and revised to reflect current conditions and new information you have gathered while running your business.
A great business plan is the starting point for achieving outstanding performance and results.
There are critical preliminary questions to address before you begin to prepare a business plan. You need to think about your target audience and the goals of your plan.
Plans that will never leave the office and are used exclusively for internal strategic planning and management purposes may use more informal language and not have much visual appeal.
On the other hand, a plan for a senior executive’s office will have a high degree of polish and focus on the high growth aspects of the business and the experienced team that will deliver amazing results.
Investors invest in people who will implement good ideas. It is therefore essential to include the biographies of the key members of the management team and how their background and experience will contribute to the growth of the company.
A business plan should be concise so that the reader wants to see it through. A business plan should be simple, short and easy to read. All information should fit into a 15-20 page document.
If there are crucial elements of the business plan that take up a lot of space, they should be referenced in the main plan and included as an appendix.
What sets your business plan apart is having four key elements that must be well defined, described and presented comprehensively in the plan, namely a compelling executive summary, a financial model, mitigation steps risks and why you are uniquely qualified to succeed.
It’s your company’s calling card and your first chance to make a first impression. It should be succinct and touch on the main highlights of the plan. Many potential investors will never get past the executive summary, so it should be compelling and intriguing.
The executive summary should provide a quick overview of the problem your company solves, the company’s target market, key financial highlights, and a summary of the management team. Keep the summary short with a feed to hook the reader to continue reading.
The financial model allows a company to forecast how much money is needed to manage operations and growth and when the money will be needed. It presents projected sales, costs, expenses and payment schedule, personnel plan, profit and loss account, cash flow statement and a balance sheet.
When developing the financial model and projections, and especially when seeking an investor, there is a great temptation to include a very positive picture of good sales and reduced costs.
However, this will most likely put you in a coalition course with your investors. Business plan developers need to be financially prudent and realistic and aware that the first few years won’t be very comfortable. They must remember that costs tend to be higher than expected and sales lower than expected.
Therefore, the plan should strive to paint a clear picture of the costs and inconveniences that come with every major decision and maintain realistic revenue forecasts.
You will do the right thing if you have factored the above scenario into your model and if the result is still positive, you are looking at a very good business with excellent prospects.
Risk Mitigation Milestones
Most start-up businesses and projects fail because they fail to consider the risks that could impede the successful implementation of an otherwise well-thought-out plan.
It can be either a production strategy that ignores competitive pressure, or a marketing strategy with a weak path to market or a dysfunctional channel approach.
Look critically at all the things that could go wrong. Don’t muzzle them for fear of scaring off potential mates. Be honest and realistic and your partners and financiers will respect you all the more.
It is rather embarrassing that your partners start punching holes in your plan by specifying the risks that the business will definitely be exposed to, but for which you have not identified and prepared the respective mitigation measures.
Unique value proposition
To be successful, a business must be able to leverage its unique strengths that will allow it to make the most of the opportunities the environment presents.
In this case, the business plan aims to explain what the new company will do differently and better, how it will achieve its objectives and, above all, why the management team is the right person to implement the strategy.
Use a SWOT model to analyze the strengths and opportunities that the business can easily take advantage of. Highlight them as key success factors and develop a unique value proposition that creates a unique competitive advantage for the business.