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Prepare a Great Business Plan |
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A business plan is like a route map to your destination that you can actually implement. Such a plan helps in four ways. It gives your business a sense of direction; it convinces others that you have a sense of direction; it helps build commitment because you have publicly announced your objectives and it gives you something to measure your progress against – helping you identify issues early on and take appropriate action.
Research shows that businesses that undertake regular business planning have an average profit margin of 54%. For those that do not, the average profit margin is 35%.
Sense of Direction
A business plan should be seen as a continuously developing document or process. It’s a vehicle to spell out your vision for what your business will look like at the end of a given period. It’s also a template for action. |
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Many businesses fail because they literally do not know what they are doing. They usually start with a good idea, but are often distracted by every money-making opportunity that comes along. Some opportunities may turn out to be profitable, others may not. After a year or so, you may wake up and find you are no longer in control of the business. The business is controlling you.
Indeed, what you may have is not so much a business, as a collection of deals. This may be fine until one deal goes sour and the whole pyramid collapses. Bills still have to be paid, but you don’t have the income-generating base to pay them. No one, especially professional financiers, would invest in a business like that. Also, resources such as time and cash are scarce for almost all businesses. So your business plan will force you to prioritize which opportunities you will pursue for the maximum long-term benefit and also help you think through how you will communicate your vision to others.
Convincing others
When you have the direction of your business clear in your own mind, you can more easily convince others to share it. First, you share it with your colleagues and employees. A good plan will set targets by which progress can be measured. This should lead to a shared sense of achievement that will help you motivate everyone in the business.
Secondly, your plan has to convince your financial backers – investors, bank managers, the spouse who allows you to re-mortgage the house, and anyone else on whose money you must rely. They will need to be assured that you have not only thought carefully about the future of the business, but also that your thoughts are sensible. It can also help you to recruit better, higher-level employees. To this end, there is something really tangible and even comforting about a solid business plan. It is something to which everyone can refer – you, your staff, your bankers and your investors. It is evidence of a shared commitment. |
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| The key elements of a Business Plan |
| Short and concise plans are better than big and impressive-looking ones. A single A4 page may be all that is necessary. Jargon, far from being compulsory... |
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| Check List |
Be clear in your own mind what you want before attempting to convince others.
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