You might be on the verge of launching your own business, or have the desire to expand a fledgling operation.
But do you really have a plan? A plan to understand the impact of growth, a plan to consider how you’ll manage the money going out the door as you expand, a plan to look to the future? In short, do you have a comprehensive Business Plan?
Without the aid of a crystal ball, it’s not easy to predict what will happen in three months’ time, let alone three years.
But a good Business Plan will help keep you on the right track by describing what your business looks like now and what you expect it to look like in the future.
This is especially important in these times of uncertainty and instability, with a sold strategy helping to mitigate, or at least dilute, any potential pitfalls which lie ahead.
A solid Business Plan is also essential if you need to source funding and want to convince a lender that you’re thinking ahead and have a realistic appreciation of potential profit and costs.
Growth and profitability don’t necessarily go hand in hand. Taking on extra staff to deliver the growth may mean your business needs new machinery and tools to do the job, and even new premises. Suddenly that’s a potential big hit to your cost base.
A Business Plan will help you, and any lender, understand your operation and demonstrate that you have a handle on your financial performance.
Keep it sharp and to the point but don’t gloss over important areas. Make sure it’s clear that you’ve considered the key challenges and issues that could have a major impact on your business.
Include an executive summary, a description of what the business does and its marketplace, highlight key individuals, future plans and the need for additional funding, present financials, both for now and future predictions, and a summary highlighting key points.
Detailed financials and a breakdown of personal assets and liabilities, personal income and expenditure could be included in appendices, depending on the size and stage of the business.
This is not a definitive list as a Business Plan will vary from business to business, sector to sector, and even lender to lender if you’re seeking finance.
Remember, with your Business Plan you’re demonstrating to yourself and a funding provider that you have thought through the concept carefully, your expectations are realistic, you have mitigated any risks as far as possible – and that you have a Plan B.
This is not just a plan to attract funding, it can also be used as a tool to help you monitor the progress of your business. Are your sales on track? What about your costs? Strict monitoring will flag up any issues early on and help you take action if you’re paying too much for your supplies and not selling enough, your prices are too low or you have taken on too many employees.
The key message here is don’t put the Business Plan aside once you have secured funding. If you don’t look at your ‘map’, how do you know you are off course?
Many lenders will insist on a Business Plan but the upside to that is it will increase your choice of funding providers and potentially reduce the cost of finance.
Benjamin Franklin once said ‘If you fail to plan, you are planning to fail’ – prepare to succeed by committing the time to developing a concrete Business Plan.
This article was provided by our partners Funder Finder, the engine powering Alternative Business Funding.
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