Business Plans
A detailed business plan is usually required to explain your intentions to investors and partners. Just as importantly, it should provide a useful guide for internal use by the owners/directors and staff.
Some people find that writing a business plan is a nightmare. Others find that the exercise produces a useless document. Many businesses fail despite having an impressive Business Plan document.
The reason is usually that the proposed business is not based on the solid foundations of a feasible business formula.
The Business Formula
The most important thing about a business plan is the business formula it describes - and the feasibility of that business formula - not the amount of detail or the thickness of the business plan document.
It’s essential to establish the fundamentals of why you are planning to do it as well as how you are planning to do it. Once you are clear about these matters and have the framework of a feasible formula which brings together your skills and your selected customers’ needs in a financially sustainable way, then the route to success becomes clear and the rest of the business plan will fall into place relatively easily.
There is no standard template for a business plan, but there are some essential ingredients (see below). In fact you don’t even have to call it a business plan – some organisations prefer the term Development Plan. It is simply your way of setting out your plans for yourself and for others in a comprehensive, clear and useful way. It should answer all the questions that a potential partner or investor might ask. The best business plans are those that a creative entrepreneur actually wants to refer to often and is updated on a rolling basis as time goes by and circumstances change.
Your business plan describes your route to success. It is your pocket guide on an exciting journey and helps you keep going in the right direction as the adventure unfolds.
Essential Ingredients
The essential ingredients of a business plan:
1. The business formula. In other words, your unique mixture of particular products/services at which you excel, carefully selected customers or target markets, which can combine to produce the desired financial result, consistent with your Values.
2. Expanding on the above, the business plan needs to explain:
2.1 The particular products or services you have chosen to offer the market and why you excel amongst the competition.
2.2 Which customers or target markets you have selected (and by implication which customers you will not target) and the reasons for this.
2.3 How you will achieve your financial targets by matching together particular products/services with selected customers. (See Financial Forecasts below.)
3. Details of the main people involved and their ability to deliver the business objectives according to plan. This requires both creative talent and business skills (T-Shirts and Suits!).
4. Financial forecasts. Your best estimates of how much money will need to be invested in the first place and the ongoing financial income and expenditure. These will be expressed as income and expenditure forecasts, cash flow forecasts and balance sheets.
5. Risks. The risks involved and how you plan to eliminate or minimise these risks.
6. Other details such as premises, company structure, staffing, employment policies, insurances, equipment, training and professional development.
7. Appendices for detailed information to support the main case made in the business plan, such as market research, competitor analysis, environmental analysis, CVs of the main people involved, constitution and company structure, etc etc.
