In last month’s edition of In Touch, I spoke about my ’14 Principles of Success in Business’ and introduced the first principle: Build a relevant business. This month, I’m focusing on my second principle: ‘Develop a clear business plan’. Without wishing to tell you how to run your business, I hope you find them a useful reminder or aid and would welcome any feedback or comments.
You will probably have heard the adage: “If you don’t know where you are going, how do you know when you get there?”. I firmly believe that if you don’t set clear goals for your business you are in danger of drifting aimlessly like a rudderless ship. A well-written business plan will help you to focus on your goals and objectives and provide you with direction and focus.
If you’ve never written a business plan before and are unsure where to start, you will be able to find countless self-help guides on the internet or at your local book store. There are literally millions available online; perhaps a good place to start is via the Gov.uk website.
Planning for the three years ahead is usually a good basis. As your business plan may be referred to by a bank, venture capitalists, crowd funders or other investors, it’s important to use clear, concise, jargon-free language. Include a summary of your business so that interested parties can understand what you’re about from a quick glance at your plan. Indicate how you are expecting to make money from the business, including how much and by what time.
Make sure your objectives are stated in SMART terms, ie they are specific, measurable, achievable, relevant and time-bound. This will help you to drill down into each goal and encourage you to identify how precisely you will deliver your plan.
A key part of achieving your objectives is to have a clear understanding of your target audience(s). Who do you expect to buy your product or service? Are there any competitors also in this space? What do they have that you don’t? Are there other factors, for example, political, social, environmental, legal, economic or technological, that are likely to affect your buyers’ behaviour. By answering these questions, you will be able to make better strategic decisions for your business. They will also form the basis for your marketing plan.
A further essential part of your business plan is the finance section. You need to be very clear about how you intend to make a profit. It’s fine to be ambitious about the future and to set yourself stretching goals, but your figures need to be well-thought through and plausible. This is particularly important if you are looking to borrow money for the business. We’ve all seen entrepreneurs squirming under the scrutiny of BBC’s Dragon’s Den investors as they try to justify their figures. Make sure you have a thorough grasp of your projected turnover, profit and loss and cash flow projections, whether or not you’re seeking external investment.
Once developed, your business plan should not be seen as a task that’s complete and never referred to again. It’s a living document that should be shared with team members so that they can understand their role in relation to the achievement of business objectives. It should also be regularly reviewed. If the COVID19 pandemic has taught us nothing else, it’s that sometimes unpredictable things can happen. However, even in normal circumstances your Business Plan will need to be refreshed and updated on at least an annual basis.
These tips are all included in the ‘Healthy Business Finances’ chapter of my book, Your Bigger Future. You can download the chapter for free or please visit the Your Bigger Future website for further information about the book.
Please note that the views expressed in the book, ‘Your Bigger Future’, are solely those of the author Brian Morman and not those of Brunsdon Financial.
Brunsdon Financial is not responsible for the content of third party web sites.