A business plan is an important document for any company. It defines the company’s objectives, and how the company intends to achieve those objectives.
Such documents are a vital part of encouraging a bank to give you a loan, getting investors to back your ideas, or even just displaying a better understanding of how your company is operating.
Considering how important a business plan is, it is necessary to do a good job, so you should not jump straight into writing one without a certain degree of preparation. Pause for a second, and consider the answers to some basic questions to help you construct the business plan you need.
Why Do You Need a Business Plan?
Anybody beginning or extending a venture that will consume significant resources of money, energy or time, and that is expected to return a profit, should take the time to draft some kind of business plan. However, there are several different reasons why you might want a business plan, and your particular reason affects the way you create the plan.
For many people, the reason for creating a business plan is to get financial aid from investors and banks. Plans with this aim need an exceptional executive summary that gives a clear view, in layman’s terms, of how the company operates. Give special attention to the financial side of things, as an investor needs to see projections that suggest a healthy return on an investment.
Another common reason for a plan is to monitor the ongoing growth and success of the company. Update such plans regularly, particularly at the beginning of a new financial year, or when there has been a dramatic change in the world economy or your industry specifically.
What Are Your Goals?
It may seem obvious, but a business plan must be more than a set of financial projections and a breakdown of what you are doing right now. It is a plan, and therefore needs defined goals.
Before you put pen to paper, consider how you want your company to expand over the period of the plan (normally 3 to 5 years). Define your aspirations. This not only keeps you focused, it also allows investors and associates to understand how you intend to achieve your goals.
Planning how to reach your goals also helps to define potential risks, giving you ample time to prepare for them. Even if you have no idea how to go about showcasing your goals and ambitions, there are many examples of business plan and templates to give you an idea as to what needs to be included to help you showcase your plan in effective manner.
How Much Detail Do You Need?
Nobody knows your business as well as you, and when you start to lay out your strategies and projections it is easy to get wrapped up in the fine details. However, writing a document that is hundreds of pages long is not a good way to go about creating your plan, according to Inc.com.
Investors, or potential customers, are unlikely to be interested in wading through that much information; they want to see clear and concise data, presented in easily digestible quantities. In particular, avoid technical information. Aim to create a document that anyone can understand.
Being too vague is also a problem, especially if you are seeking financial assistance. Nobody is going to put money into a project unless you have clearly defined the risks and rewards.
You may be concerned that providing too much information to company outsiders puts you at risk from competitors. If this is a concern, consider requesting that investors sign a non-disclosure agreement.
Plan for Success
A business plan is a constantly evolving document that represents everything your company is and has the potential to be. It helps generate new business, encourages investment, and allows you to keep your business on track. It is worth taking the time to do a good plan, and to update it regularly.