What’s a Business Plan and How Does it Get Used?
Whether you are just starting out in business or you are already an established business,…
Whether you are just starting out in business or you are already an established business, having a business plan is essential for the development and growth of your business.
A business plan is like a road map for its development, setting out the basics of the business and where it needs to go. A business plan can be used for several other purposes as well as your own internal development use. If you are looking for finance, it becomes a key document, whether you are looking for finance from a bank, new investors or shareholders.
The idea is to let any potential investors or lenders understand the vision and goals for the business and how any investment is going to be spent setting out the benefits both to any investor and to the business.
Your plan should consist of an executive summary, market research, marketing plan and financial information. Your executive summary should introduce and highlight the key points of your business and your aims with detail and organisational charts of any key personnel. Your market research should give detail of your competitors, who your potential customers are and the reasons why your product fits in and will grow in the market place. Your marketing plan should show detail of how you will be marketing or introducing your new product and the targets you wish to achieve. Your financial information will need to give details of the business’ performance and expected performance.
You may need to adjust and tailor your business plan depending on its use, so that you can get it’s potential and value to your targeted audience. This means if you are presenting your business plan to the bank when applying for additional funding, you will want to show the details that the bank will be interested in, which can differ to what others may want to see. For example, your bank will want to see how the loan is going to be repaid, how you are going to use the money and how this will help your business grow as well as your current financial status and commitments.
If you are presenting it to an investor, an investor will want to see how you plan to use the money, when and how you are going to pay it back, what their return on the investment will be, what other sources of funding you have or are using, what money you have invested yourself and a demonstration of your ability to manage. In both these business plans, as well as the detail about the business and its way forward, you will also want to include a detailed profit and loss account showing any current and previous results as well as the forecasts and cashflow.
When writing your business plan, you need to be realistic with your assumptions and projections and don’t be too ambitious so it does not appear reasonable. It is also a good idea to show cashflow forecasting and procedures and policies for collecting cash in.
You will constantly need to review and compare results, making amendments and adjustments along the way. By doing this, it should give you the information to be able to start or keep growing your business.