Your business plan is a superb discipline for taking ‘time-out’ and really understanding how you and your enterprise are positioned, set new strategic goals and plan tactical activities to achieve these goals. If you are seeking investment for an enterprise which needs transformation, launch of a new service/product or starting a new business you will need to convey your vision to investors, who are looking for ideas with clear and understandable market potential. Business plans are also often used by organisations trying to attract key employees, those prospecting for new business from new markets and in our dealings with suppliers. Your business plan is vital in aiding understanding of how to manage your enterprise more effectively for sustainable growth. It needs to be a vibrant document which ought not to sit on a dusty shelf, never being used after completion. The best business plans are living entities, amended often, referred to regularly and used for reflection and guidance. Start with a very simple outline of your enterprise. This is the seed for your business plan. Make sure you can describe the business you envision in just a few words, be it transforming a current enterprise or setting out to build a new one. Ensure you can outline the concept, the marketplace and have an idea of the financials. This initial rough description will help with the next step; following the specifics of what needs to be included in the business plan. Now focus on where you want your business to be in three or five years’ time, then working backward to today, creates annual plans within your five or three-year plan cycle. This is a proven and successful way to write effective mid to long-term business plans. None of us have prescient knowledge of the future; we will get some of our estimates and forecasts wrong. As time passes after completion of the business plan we can learn from seeing these differences, and mapping the variances from what actually happened to what we thought was going to happen. Your tactics might have to change, but there’s a strong probability your goals will not. Be realistic when planning; ‘halve your revenue, double your costs and triple the time it takes to get the cash paid-in’ is a great mantra when finalizing year one financials in your business plan for a new service/product launch or a new start-up. Ensure expectations are honest; do not be bullishly optimistic with sales and cost estimates. Watch out for leaving yourself in an over-trading position, particularly for start-ups, when you end up under-funded – without cash to pay invoices from suppliers
even though the order book is shown to be full with invoiced sales – but your cash from customers has not yet arrived. It is especially important to know and understand your financial numbers; do not just rely on your accountant or finance management team. But remember, your plan needs to clarify exactly what your business is setting out to achieve and how you are going to do it; much more than just the numbers in your financial statements. When collating thoughts, research and carrying out all the activity to make this planning happen, you need to be concerned about all parts of the plan. You will, of course, want to make use of specialists to help you, perhaps with finance, IT, HR, marketing or perhaps with an organization design consultant, ensuring alignment and all systems, processes, and activities are workable and doing what is needed of them. It makes sense to get help to set-up this process, particularly if it is the first |time you are doing it. Getting it right the first time will help with all your future-use of the plan. Writing a three or five-year business plan can seem like a mountain to climb, leaving you asking is it worth the effort. It can be a daunting prospect, but you are unlikely to regret the time and effort invested to set up this system for longerrange business planning. You need to keep measuring results against your plan, learning lessons and amending where necessary to ensure you have a sustainably successful enterprise.
Your business plan:
- Is you r friend
- Conveys your strategic business goals, the tactics you will use to meet these goals, potential obstacles, challenges and problems confronting the enterprise and outlining ways to solve them
- Outlines the roles of key executives and the structure of the enterprise
- Itemises the capital required to finance your planned transformation or your new venture
- Reflects not only your financial goals, but also your values, and those of the community you are in
- Enables you to ponder on and assess what has been going on compared to what you thought was going to go on
- Creates a dynamic response to what is going on around you, aiding flexibility and agility
- Expresses the culture you wish to be part of in your business
Content of Your Business Plan:
- Cover, Title Page and Table of Contents s Executive Summary: written last
- Background: why the plan has been crafted
- Introduction: five years or three-year cast-forward and the reason for the choice of period
- Purpose, Vision, Values, Mission
- Outline each unit is included: separate operations if there is more than one business unit: geographic / brands/ products/market sectors
- Broad Goals
- Value Proposition: why customers will buy from you
- Rationale for your Conclusions
Management & Organisation Review s
- Management and Organization breakdown: strengths and weaknesses
- Organisation charts
- Role descriptions: job descriptions written to fit outlined broad goals
- Systems of Communication including Target Setting, KPI Monitoring and Performance Evaluations
Operations & Processes Review s
- Draft Specific Objectives
- Show fit with Broad Goals (SCORE and SMART)
Marketing and Sales Review s Size & shape of market; environment review (STEEPLE and VUICA)
- Marketing and Sales Channels (traditional, legacy and online)
- Overview of marketing and sales strategy (5 x Ps of Strategy)
- Projected shape of future market: opportunities and threats
- Design and development plan (7 x Ps of Marketing)
- Nature of customer focus
- Market driving/ driven/ follower perspectives
- Level of customer focus
Competitor Analysis s
- Definition of rivalrous market: defined boundaries
- Review direct rivals: relative strengths and weaknesses
- Examine substitutes
- Explore potential new entrants
- Supplier-power review
- Market share performance
Summary of Financial Review
- Profit and Loss Annual Budgets for
three to five years - Cash Flows Annual Budget for three to five years
- Forecast Balance Sheet Annual Snapshots for three to five years
Summary of Assumptions s Examination of the company’s assumptions
- Explore how other assumptions might influence the plan
- Appendix (optional) including relevant CVs, permits, or leases Summary of Financial Requirements s Request for funding
- To include proposed CAPEX requirements