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As the old business adage goes "people who fail
to plan - plan to fail".
A business plan is a document that lists all the
factors that may have an impact on the operation, management and success
of your business. It might appear to you that you have a good idea of
what is involved, but it isn't until you sit down and list the possible ramifications of changes
in market conditions, that you will appreciate this
extra level of planning.
A business plan can be a document that puts down your
ideas and converts them into reality. It may also help establish your
business' credentials for obtaining finance or investment partners.
When writing a business plan you should consider:
Everyone who opens a business has a plan no matter
how informal. Hopefully, you will at least have worked out whether you
can make a living from the business, as you will probably be giving up a regular
income for one that is not so regular.
At some point you will need to communicate your plan
to others, such as suppliers, professional advisors, and perhaps a
financier from whom you wish to obtain funding. Having a written
plan is an essential communication tool, since it's not practical to
explain your operations in person each time someone needs to know who
you are and what you are doing. Creating a written business plan can help
ensure you haven't missed any significant factors that may have a
detrimental effect on your new business.
A written plan serves as:
- a reality check - forcing you to consider all pertinent factors
- your business resumé - important when applying for finance
or attracting partners
- a business timetable - for all the activities of your
company
- a means of tracking progress - on whether your goals and
ambitions are met
Making a business plan is quite a significant
exercise. If you're just starting out in business, the time it takes to
create the first plan will be more than repaid by the insight you gain.
If you're in business already but have never created a business plan,
you'll be in a much better position to assess the opportunities and risks
that accompany any new directions you may be considering.
A business plan is worthwhile if you are:
Starting a new business
Assuming that you have what it takes to start a
business from scratch and you're certain you want to proceed, then a
business plan will demonstrate whether your idea is feasible or not. It is better to find out
before you start, rather than after you've signed the lease and printed
the stationery.
If you are starting a new business from scratch your
plan will be based on assumptions regarding costs, labour, the number of
potential customers, pricing, and many other factors. This process will
help you work logically through all eventualities and provide you with
more insight into your proposed business.
Expanding your business
If your business is growing, a plan will help you
work out where the opportunities and pitfalls lie. There might be
economies of scale or outsourcing opportunities to explore.
Launching a new product
Launching a new product is definitely a time when
you'll want to create a business plan. Acquiring resources and the
product roll out timetable may have to be incorporated into the overall
plan.
Expanding into a new market
To successfully handle expansion into a new market,
it is essential that you plan for it. In order to reach most new
markets, you will have to face many of the same issues that you
addressed when you first went into business but you'll have more to do
and only the same number of hours in the day to do it.
Acquiring a new business
A business plan is the perfect tool to use when you
assess whether you should buy a business. In fact, many sellers will
have created a business profile to fully acquaint you with their
business (but probably not its shortcomings). You can use this as a
starting point for creating your own plan for the future.
If you are thinking of buying a franchise or
incorporating your existing business into a franchise group, you should
consider whether the benefits outweigh the associated costs and
restrictions. A plan is an excellent tool for creating these
comparisons.
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