What is a Business Plan?
A business plan is a guide that a business uses to plan and direct their business and its future growth. It’s a place to set goals and a create a roadmap of how and when to achieve them. It also helps align management towards these goals.
The businesses long and short term goals and financial information are the core of the business plan.
What Businesses Need it?
All businesses should have a business plan. Writing it forces the business owner to think about all aspects of the business. It moves them from purely thinking about products, services and daily operations to long term planning and overall strategy. It also helps uncover things that they may have missed that could impact their business.
How Formal Should it be?
In short it depends. The business plan for a cafe and a large multinational company will be quite different. The level of formality is up to the business owner and what they are comfortable with. If an informal plan will make it easier for them to spend time on writing and regularly updating their plan then that’s the way to go.
If the business will require external financing in the future the business plan should be more formal. The business owner can always seek help in writing the plan to the required business level. Its also easier to rewrite an informal plan than start from scratch.
Who Should be it Written for?
It can be written for:
- The business owner/owner’s
- Upper management
- Shareholders and other people with a stake in the business
- External parties like banks and other sources of funding
How Long Should it should be?
A business plan can be anything from a few pages to hundreds of pages long depending on the size of the business and its requirements. Excessively long business plans have (luckily) become less common. Short, concise and easily understood is the best way.
Writing a business plan doesn’t need to be overwhelming. A short business plan is better than no business plan, and it can always be added to over time.
How do I Write a Business Plan?
To start with write down your business idea, target market, timeline and financing information. Then use this as a starting point to fill out the other information.
If you don’t have experience writing there are excellent templates that can be used to help the process (see next section). These often cover more details than are initially required so large parts can be deleted.
There are also professionals that specialise in helping businesses write their business plan. These can vary in quality so you should do you research to make sure the service has a good reputation and is cost effective.
Are There Templates That Can Guide me?
Below are some excellent templates that can serve as a starting point:
- Business.gov.a
- Nab.com.au
- Score.or
What are the Advantages of Using a Business Plan?
Some benefits include:
- Long term business planning and goal setting
- Forces the business owner to consider all aspects of the business and its long term sustainability
- Forces the business owner to evaluate their business objectively and unemotionally
- Helps set business priorities
- Can highlight serious issues with the business
- Helps to unify all aspects of the business
- Helps the relevant parties understand the core business and keep it on track to meet its objectives
- Helps manage change in the business
- Helps in creating marketing and online advertising plans
- Is a place to define metrics and how to collect and measure them
- Can show who is accountable for each part of the business
- Helps evaluate all assumptions
- Shows where the business will require external help
- Helps identify and maximise competitive advantages
How Often Should I Update it?
You should schedule regular time to review and update your business plan. It will change as your business grows. As you get more information it should be added to the business plan.
Ultimately it is up to you, the plan could be updated weekly, yearly or anything in-between. It’s recommended to update every few months though, and at a minimum yearly.
It can be tempting to only update your business plan when starting a new business or applying for finance but its better to keep it updated as often as possible. This helps keep you business on track with your overall strategy. For my web design business I update my business plan every 6 months.
Summary
As the name suggests a business plan helps you plan your business. Considering that most small businesses fail in their first few years, it could be what gets you over the line and on the path to owing a successful and profitable business. If you don’t have a plan then start writing today. Start small and add to it over time. I think you will be surprised how deeply it forces you to consider all aspects of your business.
If you would like help with this please reach out to my web design company.
