Any business, whether starting up or established, must always continue to have an understanding of why it exists and to whom it serves, whilst also having a clear vision of where it wants to go.
A business plan aims to address the key questions that any owner must continually ask. Whether that’s a start-up looking to attract funding to get the business off the ground, or a developed business with a strong credit history looking to appraise and reconsider its strategic direction, or even just to reconcile and re-affirm its model and why it exists at all.
Even if just a brief summary with supporting key financials, a business plan will be a valuable internal tool for any business owner. It provides a clear plan for any idea, even one at its early stages. It also aids consistency between how you want the business to be viewed by external stakeholders and how that extends throughout the marketing and branding of your products or services.
The key questions that any good business plan should address are as follows: –
- What are we providing?
- What makes our business different?
- Who are our markets?
- 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 any 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 requirements of its customers?
Inevitably there will be various businesses already serving the needs of your customers. Therefore, understanding your market and competition is essential and will involve a lot of research on your part. It’s vital that the plan determines what makes you different from them, and identifies your competitive advantages.
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 central to your approach.
This demographic could evolve over time, so once you are established it’s far easier to then look to expand into other markets. The business plan can therefore direct you at key stages in the development of your concept, to provide the flexibility that would be required in your thinking to aid expansion so as not to be too restricted and focused on the current niche being served.
The plan also needs to look at what is fundamental to any owner, how much money should we make? Having a thorough understanding of the costs of the business, determining the output levels where the business would breakeven, and knowing your key financial indicators is crucial.
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 used being monitored and their effectiveness of reaching your target market appraised regularly? Are current social media platforms being considered and utilized fully?
In terms of funding requirements, whether at the outset or at stages of planned expansion, any funding provider or potential investor will require sight of a detailed business plan. This plan would have to include key financial information and forecasts, ideally even building in stress tests to provide confidence that any economic fluctuations and the effect they may have are being considered.
Your business plan should continually evolve. Throughout the time as a business owner, you’re going to encounter challenges, new opportunities, and numerous factors you never considered as significant to your business when you were writing the plan initially. To continue and prosper, you’re going to have to revise your answers to these questions and update your business plan regularly.
This provides a basic outline of the advantages of developing a business plan, and the key questions it looks to answer and address.
If you require any advice, whether you are just looking to start up or are a current business owner, please contact Raffingers on 020 8551 7200.
Roy Butcher is an Associate Partner at Raffingers.