Posted on: 04/02/2020 by: David Morgan in: Planning
You may think that business plans are an outdated concept, from a bygone era and are no longer relevant in today’s fast moving, ever changing digital world. But wait a minute, let’s just slow down and think about that.
I’m sure you probably have an idea of what a business plan is, but I’ll give you a simple definition anyway.
A business plan is essentially a document that describes what your business does, where your business intends to be in the future and how you plan to achieve this. That seems straightforward doesn’t it? Let’s delve a little deeper with this.
Broadly speaking, a business plan comprises of three distinct sections. Firstly, it focuses on the actual business concept, which includes your service or product, business structure and how you are going to make sure it succeeds.
Secondly, the plan covers the marketplace, target market and competitors. And the final part focuses on the financial aspects of your business, these include cash flow, balance sheet and financial projections.
Now the definition is out of the way you might well be asking who uses business plans these days?
A well-produced business plan is crucial for all new companies and can determine whether much needed investment is secured. The vast majority of business plans are devised by new companies to portray their vision to prospective investors.
OK, you might think that because your business doesn’t need to secure funding or it is already trading that you don’t need a business plan. That would be a mistake because the purpose of creating a business plan isn’t solely to attain investment.
Established companies produce business plans when looking to diversify into new markets, attract new business, secure contracts with new suppliers or to entice highly sought-after senior personnel.
Maybe your business doesn’t fall into any of the above categories and you still think you don’t need to write a business plan…think again.
For whatever reason a business plan is created, probably the most important is the fact that it gives you, the business owner, a step by step guide to how you start your new business and how it is going to evolve over the next few years.
Recent figures released suggest that 30% of new businesses in the UK fail in the first year, and 50% fold within three years. Therefore, it is imperative that you give your business every opportunity to succeed whilst minimising the risks of failure.
These alarming statistics for new businesses can be attributed to two factors: firstly, cash flow, or a lack of, and secondly, failure to plan. The obvious solution to a cash flow problem is an injection of capital and the lack of planning is resolved by extensive research and meticulous preparation. Now, because business planning and securing capital from prospective investors are two of the basic purposes of devising a business plan, the importance of such a document takes on even greater importance.
There are no guarantees in business but at least with an accurate and well researched business plan you are optimising the chances of your business succeeding in a very competitive commercial world.
The business world has definitely changed considerably in recent years but there are certain fundamentals that remain the same even in this digital age and a business plan is one of those.
If you need help creating your business plan, we have got some expert business consultants who are only too willing to do just that. Take a look at the following link: