Sunday 18 August 2019

Knowing the importance of a comprehensive business plan

Q. I recently attended a seminar on business growth at which the speaker stressed that every business should have a well-defined, formal plan. I've been in business for almost 7 years now; do I really need a business plan?

A. Business planning is often associated with startups but in fact it's a crucial tool for any enterprise planning for growth. Formalising your business plan allows you to pull the fragments of your ideas together into a concrete plan of action and helps you to spot any potential problems your business may face.

The main purpose of a business plan is to define what shape the future of the business will take. Committing your plan to paper will help you take a step back from the situation and enable you to clarify your objectives and goals. The process will allow you to work towards your strengths, assign organisational responsibilities and allocate your resources where they'll be most beneficial.

Your business plan will also be of vital importance if you need additional funding at any stage in the future. An effective business plan shows how and why your business has the potential to make a profit and as such, will give you a better chance of attracting investors. Before you begin, make sure you carry out the necessary research.

The data in your plan should be backed up with solid facts and figures, so you will need to spend some time on this step. Your business plan should be comprehensive, but also concise and easy to read. A good rule of thumb is that anyone reading the plan should have a decent grasp of the main points after spending about 15 minutes scanning through it.

You can break down the information required in your plan into certain key sections. The executive summary gives a brief outline of the plan and highlights the essential points. Although this is the first part of your plan, tackle it last, once you have dealt with the rest of the detail. The next section is a detailed business description, providing basic information concerning the past, present and future of your company. You'll need to describe your products or services and what makes them unique. You should also identify your future goals and how you intend to achieve them.

Move on to discuss your market. Who are your customers and how do you reach them? Is the market growing and if so, how will you capitalise on this? Don't forget to include details of your competitors and explain why your customers will choose to deal with you rather than them. Your plan should also contain a section on marketing and advertising, identifying the specific ways in which you will promote your business.

The final section of the plan should deal with financial information, giving details of past performance as well as projections and forecasts for the future. You will need to attach details of recent years' accounts, together with projected profit and loss accounts, balance sheets and cash flow statements for your business. Once complete, if you continue to update your business plan regularly, it will be a valuable tool to track your progress. Don't let your business depend on reacting to events, plan your strategy and manage your growth pro-actively.

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