A business plan is a blueprint for your business. It’s a document which sets out in detail exactly how and why you’ll run your business, and includes everything from how you’ll promote it, to how you plan to fund it and who your customers will be. A complete and thorough business plan is one of the most valuable documents to help you reach your long-term goals. It gives your business direction by defining its objectives and analysing its strengths, weaknesses and competitors. It helps you understand the different factors that may affect your success. It also forces you to commit to a course of action by focusing your resources and energy on what you need to do.
If you’re already in business, it helps you to step back and look at what’s working and what you can improve on. If you’re just starting out, then developing an accurate plan will help you determine whether your business idea is feasible. By making cash-flow, sales and other financial forecasts and looking at what sort of target market you will have, you can work out whether your idea will work as a business and how easily you will be able to monetise it. Your business plan will include details of your financial forecasts, explaining how much money you think you will make within given periods, how much you will need to finance the business and how you plan to raise these funds. A well-written business plan contains information that will help you convince bank lenders, or other investors, that your business idea is a viable proposition. Lenders and investors will only risk their time and money if they’re confident that your business will be successful and profitable.
Conducting extensive market research, as part of your business plan, is also absolutely essential. Not doing so is one of the major causes of business failures. Without it, you won’t have the information you need when you’re marketing and pricing what you sell. Conduct competitor analysis to work out what sort of competition you’ll have. Try and work out your market share, what your customer profile will look like, how much repeat business you’ll get and what will give you a competitive edge. Establish what your production costs and margins are, how you’ll maximise resources and what you need to charge to break even. Your business idea doesn’t need to be new, but it does need to distinguish itself from the competition or it will struggle. By defining its unique selling points and building on your competitors’ weaknesses you can prevent this from happening.
To start a successful business, you need to be absolutely passionate about your proposition so you are committed to steering it through the good times and the bad. Creating a comprehensive business plan will allow you to come up with a strategy to deal with the various scenarios that may occur. You should use your business plan to monitor progress, hold yourself accountable and to control the destiny of your business. A business plan is not a document you create once and then leave in your bottom drawer. It’s a working document that you should develop as your business grows and changes. Successful businesses review and update their business plan regularly and also when circumstances change. Every few months, it’s a good idea to take the time to sit down and update it. Remind yourself of your goals and priorities and assess whether your strategies are working. Adjust for any new changes in your environment and also make the most of new opportunities as they present themselves. To write an effective business plan you’ll need discipline, time and focus. Although the process can seem challenging, it’s very rewarding and gives you real control over your business.