A business plan is a written statement of your business; what you want to achieve and how you plan to go about it.
It should outline the structure of your business, the product or service, the customer, the growth potential and the financials.
But as well as giving information about your business it should also inspire you for the future. It’s a blueprint for what you want to achieve and should give you a clear understanding of how you intend to get there. That’s not to say it should act as a rigid prediction of every future occurrence. You can’t control the future, and the outside circumstances will have an affect on the shape and direction of your business. But a good business plan should at least give you a clear direction to aim for.
Every business should have a plan whether it is to open a second shop or float on the stock exchange. It is why you are in business. It helps you to define strategy and, if properly used, will help you involve and motivate key members of staff.
It allows you to work out how to make your business a success and can help you avoid failure by plotting the pitfalls along the way. It should outline a realistic target for how that can happen while remaining flexible enough to make changes along the way. By setting out a plan and some targets, you can also monitor your progress and get the business back on track fairly quickly if anything goes wrong.
Hossain Rezaei, founder of, Pride Valley Foods, used a tree to plan the growth of his specialty breads business. Each stage of the business was mapped out and it is important to reach each one on budget and on time. When you borrow money explain to your backers how you will spend it and what the next stage for your business is. When you have reached that, you can go back and borrow more. “It is important to do it one step at a time,” he says.
His careful planning was crucial in keeping the business on track when a fire destroyed the factory and insurers initially refused to meet the claim. Rezaei kept sight of his original plan but put it on hold while building up the business again. He handed over customers to his competitors, moved back to old premises and approached his backers with an emergency plan. Within six months he had won back his largest customers and the business was back on track.
In Rezaei’s case, the business plan was used primarily to guide his own aspirations for the business. However, it’s often the case that a business plan is primarily written to persuade investors, whether it be the bank or private funders, to come on board with your venture. Regardless of whether you need outside funding or not, it’s always a good idea to set out your ideas on paper, even if it’s just a case of looking at your idea from the point of view of a potential investor. It can really highlight areas you haven’t yet considered and help you form a realistic estimate of how much it’s all going to cost, and in what kind of time frame you can expect to become fully open for business.