Some Business Owners think you don’t need a Business Plan unless you’re trying to borrow money. Of course, it’s true that you do need a good plan if you intend to approach a lender-whether a banker, a venture capitalist or any number of other sources-for start-up capital or to fund the growth strategy in your Business Plan.
A well-written business plan, covering at least 3 years, will also be essential to help convince investors or lenders to finance your business.
The Financial Projections in your plan must clearly show them how much capital you will need to raise, and when and why you will require it.
But your Business Plan is much more than a pitch for financing; it’s a guide to help you define, monitor and achieve your business goals.
Writing a business plan is an opportunity to carefully think through every step of starting or growing your company so that you can prepare in advance for growth and success.
In this article we will go into detail:
– Why you need a business plan,
– Your business plan is your roadmap to manage your company
– Your Industry, Your Competitors and Customers
– Writing Your Marketing Plan
– How Your Business Plan Will Attract The Right People
– Your Business Plan Is Your Tool To Manage Your Business
Why You Need A Business Plan
Your business plan is your roadmap to manage your company.
Your business plan provides a roadmap from which you manage and operate your business, and to refer to for direction in times of doubt. It should clearly lay out the long-term milestones that are most important to the ongoing success of your business.
Without a clear view of your long-term milestones, you may shift your short-term strategies without fully considering the long-term impact.
The time you spend making your business plan thorough and accurate and keeping it up to date, is an investment that will pay big dividends in the medium to long term.
As you research and prepare your plan, you’ll find weak spots in your business idea or growth plan that you’ll be able to repair.
Your Industry, Your Competitors and Customers:
You will need to explain Your Industry, your Competitors and Customers:
- What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your product/service?
- Which geographic locations are you planning to serve? Depending on the Nature of your product or service, or whether your business is online or bricks and mortar. Covering rural areas or selling Interstate will add complexity, and if you plan to sell Internationally there will be a lot of additional factors to take into account, including logistics, duty and tariffs, local competition, what model will you use? Retail, local business in same industry or a local distributor, and more.
Tip: If you sell physical products, start locally to test and refine the model you plan to use, and even more important, for new products to get “Proof of Concept” I.e. Will people want your product, and will they be prepared to pay a fair price for it?
- It forces you to analyse the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages.
- Also, to get a better understanding of your customers. Why do they buy, when they buy? What need are you fulfilling for them? An in-depth customer analysis is essential to an effective business plan and to a successful business.
Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business.
You’ll also discover areas with potential you may not have even thought about before-and ways to profit from them.
If you are a Start-up business, analysing the competition and getting a detailed understanding of your customers serves as a feasibility study for the success of your venture.
Only by going through the process of putting together your plan can you decide whether your great idea is really worth your time, effort and investment.
Write Your Marketing Plan
Once you have defined your Industry, competitors and customer you will be ready to write your Marketing Plan, one of the key sections of your business plan. Your marketing plan will need to explain:
- How you are going to reach your customers?
- How you will convince them to buy?
- How will you retain them?
- What is your advertising budget? and
- What price will you charge?
A well-documented marketing plan is essential to the growth of a business.
Your Business Plan Is Your Tool To Manage Your Business
So, in fact, a business plan is a tool for understanding how your business is put together and how it will operate. You can use it to monitor ongoing progress, and to hold yourself accountable and control the business’s fate.
Writing out your plan forces you to review all the elements that make up your final strategy and how they will all fit together:
- your value proposition,
- marketing assumptions,
- operations plan,
- financial plan and staffing plan.
They are all interrelated pieces of the puzzle that fit together to form your plan.
In this process, you’ll probably end up spotting key elements you otherwise would have missed.
For example, if your marketing plan projects 1,000 customers by year two but your staffing plan provides for only two salespeople, that forces you to ask: How can two salespeople generate 1,000 customers? The answer might lead you to conclude that forming partnerships, targeting distributors or concentrating on bulk sales to large companies would be your best tactics.
As part of your marketing and operational plans, you’ll define major milestones. When you’re the founder, the only person holding you accountable to achieve those results on a daily basis is you.
So your plan becomes a baseline for monitoring your progress. But even more than a tool for after-the-fact learning, a plan is how you drive the future. When you write, “We expect to grow sales to $1 million by the end of year one,” it’s not a passive prediction-you don’t just wait for the customers to show up. It becomes your sales team’s goal.
The plan lays out targets in all major areas of your business: sales, marketing, pricing, costs of production or purchase, expense items, hiring positions, capital expenditure and your financing goals.
Once defined, the targets become measurable key performance goals and indicators. I.e. the KPI’s you will measure your results against every month.
Your Business Plan Will Attract The Right People
And of course, your plan is a sales and recruiting tool for courting key employees. To attract and retain top quality talent. Your business plan must inspire employees and management, to convince them that the idea is sound and that the business is poised to achieve its strategic goals.
And of course, a well-written plan is great for attracting talent. When a prospect asks to understand your business, you can hand them a plan that gives them an entire overview.
Their reactions tell you something about how quickly and thoroughly they can think through your business’s key issues.
Your Business Plan Is The Core Of Your Business Development & Growth Program
So viewing your plan as a fund-raising tool is just the beginning of the story. You’ll use the plan for so much more-for managing yourself and your people, for operating the business and for recruiting.
The written record of your goals coupled with a track record of delivering against those goals sends a message loud and clear to all potential stakeholders:
You understand your business and can deliver the results you promise. Great employees will respond to that message-as will banks and investors the next time you need to raise money.
Your Next Step
If you would like to get more details about how to create your personalised Business Plan to build and grow your business, you can request a Free Strategy Session by clicking on the lick below:
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