Putting together a business plan
A quick outline on putting together a business plan.
With bankruptcies and company liquidations reaching record high levels over the last few years, and with the economic situation showing signs of only a slow recovery in the short term, having a sound business plan is more important than ever.
That doesn't mean throwing together a few proposals so that your Bank Manager will give you a loan. Whether you are establishing a new business or already have one up and running, a properly thought out business plan can be a vital factor in increasing your chances of success.
At a time when statistics reveal that one firm in three is likely to fail in less than two years, it is comforting to know that those which start with a sound plan are twice as likely to succeed as those who do not.
Its primary role is to help you plan and control the development of your business. Once everything is up and running it's often easy to lose sight of your objectives. Your business plan will help you measure your success, and analyze any weaknesses you may have. You will be better equipped to deal with problems, such as late payers and poor cash flow. You will also find it far easier to explain points about your business to those whose cooperation and support you require - such as your Bank Manager, your employees and perhaps even your family.
If you are just starting up, your plan should cover points that may seem really obvious:
- Identify your personal objectives, both short and medium term.
- What are the strengths and weaknesses of your business - and those of the people involved in it?
- Where will it be located and why?
- Will you need to employ people or buy in any services?
- How much will all this cost?
You will need to describe your products and services in detail. It's not enough just to say you sell a particular product. Think about your unique selling points which will make you stand out from the rest.
- You need to think about how much the product will cost you to buy in or manufacture and how much you will sell it for.
- What is your policy on pricing?
- Have you any plans for marketing?
- What about the competition?
- How do your products or services and prices compare?
If it sounds daunting, there’s no need to panic. Anyone drawing up a new business plan should seek independent advice. Someone who will take an objective overview is generally required; someone who may be able to detect flaws in the plan that you overlooked. This person should have the experience to make suggestions that will help you to bridge the gap.
Once you have put your business plan together, do not leave it to gather dust in a bottom drawer! By referring back to it as your business comes together, you will be able to assess your progress and identify areas which are not developing quite as you had anticipated. The ability to anticipate difficulties and take appropriate action can often be the key factor which differentiates the successful business from that which fails to really get off the ground.
In a difficult economic climate, a good plan has to be worth the effort.