For many people the thought of putting together a Business Plan is intimidating. The reason for this is that there is a false perception that the document needs to be long and complicated. The result, many small and medium sized businesses have unworkable business plans, or simply do not have one at all!
This need not be the case. A good business plan should be clear, concise and set out information pertinent to running the business in an easy to read format. Since the purpose of a good business plan is to crystalize one's thinking in relation to all aspects necessary for the business to succeed, the act of writing up and regularly reviewing your business plan has tremendous value. The discipline of doing so allows one to regularly evaluate the positioning of your business in the market place and determine if any changes need to be made.
A useful business plan should contain the following elements:
- Description of the Business: Here one would capture how the business came about, what products/services it currently offers, what successes the business has had since its inception, the founding values, milestones achieved and goals for the future.
- Your market & operating environment: This section should start with how the business is positioned in relation to its competitors and the broader business community it finds itself in.It should also identify the customers it currently services and targets.
- Sales & Marketing approach: Importantly, this part of the business plan examines how to attract new customers and retain existing customers in order to grow the business.Given the high degree of competition and myriad of ways to communicate with customers today, this is a vitally important part of the business plan.
- Operational aspects: In this section you want to adress the issues related to delivery of products and services. This could include manufacturing processes, delivery, customer service, interfacing with suppliers, information systems, staff requirements and so on. If you can answer who will do everything from a to z , then this section will have been dealt with properly.
- Financial Dimensions: In this section one would include historical financial results, the current balance sheet, income statement and cash flow projection. It is also wise to include cash flow projections for the next two to three years as these make one think about what it will take to grow the business. Where resources are lacking, the lack thereof provide a great framwork for planning ahead.
Apart from clarifying your thoughts and setting up a roadmap that leads to success, there are also several other reasons to have a business plan in place.
- Staying focussed on your vision and goals: The day to day demands of running a business often obscures the vision and goals we had when we started the enterprise. Regular review of the business plan helps us evaluate if those are still relevant or need to be restated.
- Appointing a panel of experts: A business owner knows they cannot do everything well. As the business grows, this becomes more evident. A business plan provides a good lens through which to examine your strenghts and weakenesses. From this excercise it is posssible to recruit experts in an advisory capacity or as full time employees to address the shortcomings.
- Measurement tool for progress: Like any good roadmap, the business plan highlights the progess or lack thereof towards achieving specific goals and meeting deadlines. Based on progress, these can be adjusted or re-framed.
- Platform for discussion with stakeholders: The business plan can be a very useful departure point to structure important conversations with a wide variety of existing or potential stakeholders in a business. This could include employees, customers, suppliers, financial institutions or even potential investors.
To gain more insight as to the value of a functional business plan and how it can be constructed, Small Business: Canada and Business Development Bank of Canada are useful resources to further explore. For those who decide to use these resources, your feedback as to the value of these links is welcomed, by accessing the comment button above.