The Benefits of Having a Business Plan

What are the Benefits of a Good Business Plan?

Writing a business plan allows you to assess the facts and figures of your business proposal while identifying what is needed to satisfy it. A well-developed business plan will initially:

• provide direction for your business and assist you in creating the action needed for your business,
• assist you and your employees in focusing on what is important,
• reveal your commitment to investors, banks, employees and colleagues,
• assist you in identifying problems as soon as possible so that you can tackle them efficiently,
• enable you to set targets and assess your success, and
• assist you in attracting appropriately qualified staff.

Creating a business plan is an ongoing process, and you have to keep reviewing the contents of your plan on a regular basis. A current plan makes it easier to persuade interested people to invest money and time in your business.

What Should Be Included in Your Business Plan?

In order to write a good business plan, you will need to be able to answer the following four questions:

1. What are your business objectives or mission statement?
2. What are you intending to achieve with your business?
3. How do you intend to achieve your business objectives?
4. What is your intended budget?

Purpose

At the beginning of your business plan you should explain the reasons for your business' existence and point out what you would like your business to gain as well as how to produce a profit.

Business Objectives

You will probably have a number of different objectives and some will be of greater importance than others.

Be specific by detailing precisely what you intend to achieve. For example, in your first year you may want to get 10 new orders every month. If this is your intention, you should be ready to take action to ensure you meet this objective.

Of course, in the first place your objectives should be attainable both in a certain time frame and for a set amount of sales. Any strategies you follow should be based on your own market research so that you are targeting the right market. Lack of market research may point you in the wrong direction.

Assess Your Business' Strengths and Weaknesses

By assessing your business' strengths and weaknesses, you will be able to produce a well-rounded business plan.

Budget

Business success is dependent on making a profit, so anyone you encourage to invest in your business will study your budget.

How to Structure Your Business Plan

Your business plan must be written in concise and clear language that is not only well researched but achievable and free of clumsy jargon. You can make a start even if you do not have the finer details at your fingertips.

When creating your business plan, it should be set out in four sections, as laid out below:

1. Your present situation. Describe your business including a description of the products or services you intend to provide and how well your business has been progressing.
2. Your future vision and when you expect to reach your targets.
3. Your strategies for realising your targets.
4. Who is doing what and when?

Each section should include the role of:

• your staff,
• your profit and cash flow,
• your current position, and
• the profile of your business.

Do not go into too much detail about your projected figures as they are subject to fluctuations more than, say, staff movements. If you find that writing your business plan is a cumbersome process, you can get some help from specially prepared software programmes.

The Benefits of Software Programs for Writing a Business Plan

Software can help to easily create sample budgets and revenue forecasts. It can help to target business goals for cash and product turnover and form expense budgets that may help business growth.

The software can manage the performance of your business using a simple-to-use dashboard that indicates your business’ key metrics, and there is no need to handle clumsy Excel formulas.

You can also create a professional single-page pitch as an investor presentation, which takes just a few minutes and can be shared easily.

The One-Hour Business Plan

Most business owners view writing their business plan as an arduous task that has to be done. If you think about it for a minute, your business plan could end up helping you sell your product to the world. Fortunately, a good plan can be written using just a single page and is as valid as a bound 70-page document.

The following example is a 10-point, one-page simplified business plan:

1. A single sentence describing your business
2. Why there is a need for your product
3. A product description, which could include product photos
4. Who your competitors are and why you offer a better product
5. What your target market is
6. What the cost of producing a single product is and your price tag
7. How many products you will sell in the coming year
8. What your marketing channels are for your product
9. Any milestones you want to achieve
10. A brief one-sentence description of yourself and why you are best suited to run your business

Why Business Plans May Be Refused Funding

Your business plan is typically the first impression you make to potential investors. You may have a great product, an excellent team of workers and a customer base, but this does not mean you will get funding.

Investors look through scores of business plans annually, seeking out possible investment opportunities. Sometimes potential investors go on recommendations from trusted sources, but often business plans are the only material available.

In your business plan, you should avoid using expressions such as, “the business has so far gained fantastic returns with limited investment” or “the business is unparalleled in the industry”. These will just be seen as fluff by potential investors as they will judge how successful a business is and if investment is worthwhile.

Some early-stage business owners firmly believe that they should explain in their business plan how their product suits different markets.

However, the majority of investors like to see a business strategy that is more focused, particularly with new companies, and prefer to see one good product that will satisfy one particular market and is distributed using a strategy that has proven its worth.

Potential investors are the judges of the facts you present about your business. The main emphasis should be on solving the business' problems, your solutions, the size of the market, how you intend to sell your product and what methods you will use to keep ahead of any competitors.

You should not focus on other products, markets and other distribution channels. Your core product and selling strategy comes first.

What Is Crowdfunding?

Crowdfunding has become very popular in the last few years. It is when businesses promote their product to get it up and running by raising financing from a large number of people.

Crowdfunding sites like Indiegogo and Kickstarter often revolve around simple rewards which are exchanged for cash to back a project. These rewards are usually cheap items like a t-shirt bearing the logo of the company. This kind of funding is most appropriate for “smaller” funding targets that can be met within a deadline of 60 days. Most funding for Kickstarter crowdfunding projects are for about £8,000.

There are certain factors you need to address before applying for crowdfunding, including outlining your requirements and goals and whether your project is for a business, a cause or an artistic endeavour.

Crowdfunding Becomes Public Information

Global exposure is a downside of crowdfunding because when putting in a request, everyone can see your business idea and some unscrupulous entrepreneurs could take advantage of you. Despite this risk, many aspiring business owners go to the main crowdfunding platforms and seek funding.