Business plan development is considered a necessary evil by many entrepreneurs – it is the process of creating a document which will help them pitch to investors and lenders. However, funding aside, you will improve your chances of business success if you take business plan development seriously.

Planning Does Help

It is a simple “out” for entrepreneurs to throw their hands up, saying “If so much of business is about flying by the seat of my pants, reacting to opportunities and threats and they arise, and changing plans continuously, there is no reason to plan for my own purposes. Certainly, a plan will be required by funders, but that plan does not have to have any similarity to the tactics which are used in the end.”

However, planning does help, even if the plan needs adjustment down the road. A plan can zero in on alternative strategies which might work and throw out those which do not fit the company’s intended brand, customer markets, or competitive situation. Without a written plan, the company is in danger of trying out strategies which seem to make sense on the surface, but really lack a good fit with the company in the long-run.

Keeping the Team Consistent

Another major reason to plan is to keep all team members on the same track. Without a written guide setting out the mission and strategy to achieve that mission, different managers may develop their own ideas about the priorities of the company and end up working at cross purposes. To serve this purpose, the business plan must be shared between the managers at least. The managers must all work to pass on guidance to their staff based on the plan.

Setting a Reflective Tone

It is extremely easy for entrepreneurs and small business owners to be caught up in the action of running their businesses on a day-to-day basis and consider reflection on where the company has come from and is going to be a luxury. Being serious about business plan development from the outset sets reflection as a priority for the company, and a business launched on this foundation stands a better chance of continuing to use planning as a tool going forward. When taken in balance with action and awareness of the present situation, reflection and planning can serve the business well.”

You don’t need to write a formal 50-page business plan to get the benefits of business planning. In fact, it’s often better to craft a workable plan that you will review regularly to make sure your business is headed in the right direction. Here are a few things to consider if you’ve been procrastinating or don’t know where to start.

Just start. Writing a business plan doesn’t mean you have to cover every section included in business planning books or software. It’s actually better to start with your own concepts for what your company should look like and what needs to be done – and create a plan that you can start using today. Don’t worry about formal structure. Your business plan doesn’t have to follow a formal business plan template exactly, so don’t worry if your plan doesn’t include every section. Think about what needs to happen in your business in the next few weeks and months. Then, write it down as best you can in bulleted format, as a mind-map, with pictures, or whatever makes sense to you. Start with an outline and work from there. Start with the most immediate tasks. What will affect your business today, tomorrow, next week? Create a plan for the next month – what do you need to do right now to grow your business, get through a current crisis, or attract more clients? Focus on the short-term and let your business plan evolve as your business evolves. Create priorities. Don’t think about your business plan as just an abstract concept. Rather, it’s your business, and you should use your plan to help you achieve your goals, work productively, and better allocate resources. What are your priorities? What is the highest and best use of your time? What are your income-producing tasks? Those are where you should spend the bulk of your time. Set metrics and benchmarks. Even if you hate numbers, having metrics and benchmarks to measure your business success is crucial to achieving your goals. At minimum, you should know how much revenue you must make each month to cover expenses. Keep your plan simple. If you don’t write up a formal market analysis, industry analysis, financial projections and other information usually included in a traditional business plan, they won’t clutter your working document. If later, you do develop them, add them as supporting information in your appendix. Be flexible. You will never have complete, perfect information to create the ideal business plan for your company. Rather, you must work with what you have. Yes, you will have to make assumptions and some things will be uncertain. Make sure you document these, so that you can edit your plan accordingly as you learn new information. Take responsibility. You are writing a plan for your business, so you need to know the details inside and out. While it is okay to speak with consultants and business planners for guidance, you – not them – should write your business plan so that you understand all the details and how everything fits together. You control the fate of your business, not outside professionals, so set goals you are comfortable with and action steps you can achieve.

Think of the components of your business plan as pieces of a puzzle. Just as you usually don’t have to put the entire puzzle together before you recognize the image, you can start building your business with just a few pieces. As you see how the pieces fit together, you can expand and complete more of the puzzle – but the key is to start somewhere.

If only 10% of businesses succeed – you want to make sure you’re one of them. This business plan layout will help you do that.

Most businesses fail because they run out of cash. Even highly profitable businesses can run into cashflow problems if they try to expand too fast for their level funding.

Your business plan strategy has to match your level of ambition to the level of funding you can reasonably expect to invest. If you can’t acquire sufficient investment, you have to reduce your ambition.

So, one of the most important outcomes of the business planning process is to decide on your ambition and work out the level of investment required and how you intend to fund it.

If you’re requesting a loan, the lender will expect your business plan to clearly show how you intend to spend the loan capital and that the business can generate sufficient cash to service the debt in terms of both interest and capital repayments.

If you’re aiming to attract equity finance, the investor will expect your business plan to indicate the expected return-on-investment as well as the likely exit strategy and timescale. This will then be compared to other opportunities they may have under consideration.

For it be fit for purpose, you have to write a business plan according to who will read it. Lenders and investors are busy people, so you need to provide the answers they require within the first 1 or 2 pages of the plan. They can then decide whether they’re interested enough to read further. So, the business plan outline should begin as follows:

1. Executive Summary

Now, whatever your level of ambition, the market has to be large enough to satisfy it, especially when you take into account the extent of the competition you’ll encounter. So, the business plan has to show an analysis of the market opportunity and how you intend to exploit it with your products and services. It also needs to show how you plan to market your brand and attract customers. This leads us to define the next 3 sections of your business plan:

2. Market Analysis
3. Products and Services
4. Marketing Plan

OK, you’ve explained your market, what you intend to supply to that market and how you intend to market your products or services.
Now you need to explain the infrastructure you’ll need in order to deliver the products or services and how you arrived at your present position. If a potential lender or investor doesn’t think your business is equipped with the right capability and experience, they won’t be inclined to invest. This leads us to define the next 2 sections of your business plan:

5. Company Background
6. Company Structure

The section on Company Structure should include any resources, equipment or systems you have or will require in order to deliver your products or service. It is quite likely that you’ll be using some of the funding to create the Company Infrastructure.
There is one more essential section that any lender or investor will expect and that relates to risk. You need to show that you’ve considered areas of risk and how you might mitigate for them. I tend to refer to this section as:

7. Business Analysis

In this section you should include your S.W.O.T. Analysis (An assessment of Internal Strengths and Weaknesses and External Opportunities and Threats) and a Sensitivity Analysis (An assessment of how far certain parameters can move for the business to remain viable).
If they’re interested in evaluating the opportunity, they’ll need to take a closer look at the numbers.
So, they’ll expect to be able to view your projections for Profit and Loss, Cashflow, Balance Sheet and a Sources and Use of Funds Statement. This we’ll refer to as:

8. Business Financials

Finally, if you’ve referenced any material or wish to include any supporting information it’s better to avoid cluttering the main body of your document and add it all in a section at the end:

9. References and Appendices

And that’s it. For a lot more detail about why this 9-section structure works and exactly what to include in each section, you can read my book:

The Heart of Business Success – How to overcome the Catch-22s of growing your business

To obtain your copy, please visit: http://www.theheartofbusinesssuccess.com
Good luck!

There are four major reasons why business planning is used for a company. The first reason is for the start up of a new venture, the second reason is for an existing organization that needs to expand, the third reason is for the purchase of an existing service, product or company, and the fourth reason is to improve an existing company, service or product

Beginning your own small business can be quite a daunting task. I applaud anyone that is willing to think outside the box, put in the endless hours of hard work and fully believes in new ideas and methodologies that can eventually lead to a successful and thriving small business.

One of the most crucial steps in becoming “the boss” and creating your own business is the business plan. This critical piece can make or break your professional future. It’s the tool that will enable you to clearly see your path and help you navigate any obstacles. Please, please do not take this lightly. Your business plan should become the bible to your business.

Clarity: Your main business idea should be clearly defined and you should be able to succinctly articulate all aspects of your services or products and how you plan to support each component. Passion: Don’t get overwhelmed with the details and mechanical structure of business planning. A wonderful technique is to simply begin with a rough outline and then go back and fill in the sub-components with a bit more detail. Your passion for your new business will take over and items will begin to flow from your mind to your pen (or keyboard.) Preparation: As indicated within my first paragraph, owning your own business can entail endless hours of hard work in the beginning. As your success grows, you can outsource several aspects or simply hire on some help. But, if you truly have the passion for what you are building and prepare accordingly, it may no longer become merely “work” to you. Create in your mind the commitment and disciplines that are needed to truly succeed. Investigation: Before purchasing a new vehicle, you may take it to a mechanic and ensure it is a sound investment and will perform as needed. You want to ensure you have dependable and safe transportation, right? Well, the same theory is needed when beginning a new business. Do your homework and investigate the market and the need for what you will be providing. Be able to show market analysis numbers and details on expenses and how profit will be created. Learn how to be different than your competitors and articulate this within your business plan. Resources: If you are reading this, then you are making wise use of a free resource. This is one very small example of what is available on a long list of resources for small business owners. Seek the knowledge of others that have been there and overcome many of the obstacles that you may see. You will likely learn a few helpful processes that can speed up a few aspects of your business. Don’t be afraid to ask questions! There are multitudes of government agencies, business professionals, trade associations and non-profit groups that are willing to help you succeed. So many new business owners wish to jump directly into what they know or do best and skip the vital step of business planning. The business plan is your roadmap to success. It is your “way ahead” and when completed will not only fuel your passion, but alleviate much unneeded anxiety. Take the time to prepare a solid business plan and don’t be afraid to ask for help when needed. You’ll be glad you did.