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So do I Really Need a Business Plan?

So do I Really Need a Business Plan?

Ann Fletcher, Career Coach & Business Planner

Do I really need to answer that? You'd be surprised how many people jump straight into getting their business off the ground in the excitement of the initial idea, then wonder why they are struggling a few months later. Or they give up, going back to their previous employment. Could this have been avoided? Quite possibly - that's where a great business plan comes in.

Don't roll your eyes - a business plan is not just a good idea, it is about due diligence and giving your business the best start in life. Even if you are a year or two down the line, it will still pay dividends to create one now. Even if you are the only one to see it for now, the time may come when you want to raise some finance or get other people on board. It will be much easier to polish up a working document than start from scratch. It is also a message to yourself that you take your business seriously, and a great way to set clear goals and create accountability (especially true if you run your business alone and struggle to maintain discipline).

Business plans for investors need to be very thorough, especially around the finances but also about your prospects - have you done your market research properly? Is there a demand for your product or service? In what ways are you better than your competitors? How can you reassure them that you know what you are doing? A business plan that is for your eyes only still needs to contain certain elements. You may not see the point at first but once you create these sections you will be much clearer about where your business is going and how you will get there.

What are the essential elements of a good business plan? It should contain at least the following:

A summary of your company and its current situation. This includes your vision, mission and values, a brief history so far, your aims for the span of the business plan (e.g. 3/5 years), an overview of your financial situation, what your products or services are, and your core competencies (e.g. if you offer computer maintenance, how are you qualified to do this?

A description of the external environment. This includes your market analysis (customer profiles, market sector, an identified need for what you offer, who your competitors are and how their offering compares to yours), and a look at the wider world. What is going on locally, nationally and internationally that might affect your business? E.g. if you have a Mac repair business, what if Apple went out of business?

Strategy and Plans. What are your objectives and in what order do you plan to achieve them? What is your business strategy (e.g. how are you going to position yourself? How are people going to find out that you exist? What is your pricing policy and why will it work?). And you need an operating plan to underpin this - the nuts and bolts of what you will actually do to achieve your grand strategy. Again, make this measurable. Things that are measurable are far more likely to be achieved.

Financial analysis. You might have a fantastic idea but does it make financial sense? This isn't just about whether you're sensible with money, it's about whether your idea really can create the income you need or want. You don't want to discover in two or three years time that it could never have worked. Think of some of those contestants on Dragons Den who have a lovely product but are then told that they aren't worth investing in - either because the market is saturated, or their customer base too limited, and so on. So, what are the real costs of your product or service? How much can you reasonably sell it for? How much income do you need to create? When do you need to create it by? Will you need staff? What will they cost? Do you need equipment to start up? Will you need bigger premises within the scope of your business plan? So many questions, so many sums to do....but you can do it! If you're not good with figures, find someone to help.

Risk analysis. This is about being prepared for any eventuality. Do a SWOT or PESTLE analysis (or even better, both) - google them if you need to. Basically, this is about identifying your company's strengths and weaknesses. What could go wrong? How can you anticipate this and make it less likely to happen?

These are the key elements of a good business plan. Obviously if you intend it to be seen by others then you will add other elements such as a cover page, contents page, introduction, summary etc. But even if it is just for your own purposes I strongly recommend you follow the plan above. If you really care about your business (which I don't doubt!) then treat it with the respect it deserves, and give it the best chance you can of succeeding. Good luck!

Want to know more about how we can help you achieve your business goals? Get in touch and let's chat.