“Do I need a business plan?” I get asked this question all the time.
Part of my role as a Partner at Raffingers requires me to venture out promoting our services to potential clients, who in many cases, become converted clients. I genuinely enjoy these opportunities to meet with entrepreneurs, and to be able to listen to how their ideas have developed into actual businesses.
I inevitably meet a lot of people who are at that early start-up stage of their business cycle. Therefore, I like to introduce what are in my opinion, the key areas of strength exhibited by the most successful business owners; and my 5 essential tips for any SME or start-up: –
- Business plan
- Cash flow management
- Time management and staff
- Growth and expansion
This then leads to the common question – “but do I need a business plan?” Because I face this question quite a lot, I thought I would revisit this subject as an article.
Any business, at whatever stage of its cycle, should always continue to have an understanding of why it exists and to whom it serves, whilst also having a clear forward-looking vision of where it wants to go. A good business plan will address key questions that any owner must continually ask. Whether that’s looking to attract funding to get the business off the ground, or for a mature business with a strong credit history that’s maybe reconsidering its strategic direction, or even just re-examining its model and why the business exists at all.
The plan might only need to be a brief summary with supporting key financials, but it will prove to be a valuable internal tool for any business owner.
It provides a clear plan for any idea, even one at the earliest of stages. It would aid consistency between how you want the business to be viewed by external stakeholders, and how that extends throughout the marketing and branding of your product or service.
Some key questions that any good business plan should address are as follows: –
- What are we providing?
- What makes our business different?
- Who are our market?
- How much money should we make?
- How are we marketing our business?
- How much funding will we need?
It’s obviously important to be able to describe what products your business makes or the services it provides, but an owner needs to continually assess the key reasons for its existence, i.e. what and who does it strive to provide for, and is it still meeting the core requirements of its customers. Understanding your market and competition is crucial and will involve a lot of research on your part. The business plan should determine what makes you different from them, and identify what your competitive advantages are.
No matter how useful or practical your product or service is, it’s very unlikely that you will have access to an entire market at the outset. Therefore, developing and understanding your initial demographic and the market you wish to access is crucial. Once you are established it’s far easier to then perhaps look to expand into other markets. Therefore, a business plan can direct you at key stages of that development, to provide the flexibility that would be required in your thinking so as not to be too restricted and focused on any current niche being served. The plan also needs to look at what is fundamental to any owner; how much money should I make? Having a thorough understanding of your costs, determining the output levels where the business would break even, to knowing what your key performance indicators are, are all vital components.
Promoting your business is just as important as creating it. Is your marketing strategy in tune with your demographic and target customer base? Are the methods being monitored and their effectiveness appraised regularly? Are current social media platforms being utilised fully?
In terms of funding requirements, whether at the outset or at stages of planned expansion, most funding providers or potential investors will require sight of a detailed business plan. The document would need to include key financial information and forecasts, promoting both the strength of the business and its management support team.
Therefore, your business plan should continually evolve. Throughout its life cycle, the business is going to encounter many challenges, new opportunities, and numerous factors you would never have considered at the start of the venture. To continue and prosper, you have to revise those answers to key questions and update your business plan regularly.
So if you’re asking yourself, ‘do I need a business plan?’ I hope this provides a clear outline of the advantages of preparing a plan and the key questions it looks to answer and address. For help creating or updating your business plan contact me, Roy Butcher, at firstname.lastname@example.org.