Five Reasons a Business Plan Should be Written
Without a plan you do not know the answers to the following questions:
- Where is your venture going to be in the next 12 months?
- What needs to be undertaken to attain your targets?
- When will you know if your goals and objectives are successful?
- How much money should you invest over the coming years?
- Why will customers buy from you and not your competitors?
If you can answer these questions in your mind, then formally writing these down acts as a sales document to encourage investment. Let's go through each of these items to see why they're important to your success.
Where Will You Be in 12 Months Time?
Traditionally plans would map out strategies for five years or more but in a world of uncertainty and change this is too far in the future. If you have a new business, then the next 12 months are the most important. If you can survive those and turn a profit then you'll have foundations for the following years.
Everyone needs targets that are attainable otherwise you don't know if you're successful or not. These targets are mainly financial, but can also include the number of profitable customers won or market share taken.
What Activities Should You Undertake?
Once you have overall strategic targets, you can develop smaller objectives to meet these goals. Most people want to do everything *now* but having too much means you'll never realise most objectives.
Select five or six key objectives for 12 months so you can concentrate and put efforts into areas that will generate the most profits for your business.
If you achieve an objective, add a new one to your list. Ensure your objectives have the correct criteria such as:
- They're specific in detail and have actions against them.
- That each has a numerical goal to measure success or failure.
- They're truly achievable and not too ambitious.
- Assign individual actions to a specific staff member.
- A time limit is placed against each one to test if they are overdue.
These are classic project management principles that will help attain your goals.
How Will You Know if You Have Achieved Your Goals?
If you articulate your goals as outlined, you'll know when you have achieved each objective. Have a list of those five or six key objectives together with your forecast that you can update each month.
Forecasting Your Investment Requirements
A simple revenue and profit forecast will immediately show what the cash flow gap is in your project. You'll then need to decide what type of financial investment will bridge that gap. Ensure that any repayments and interest are added back into your financial projections to take care of any loans made into the business.
Do You Have a Marketing Plan?
Financials and marketing make or break a business so these critical areas may require professional input. It's easy to present a solid forecast, but how will you communicate to encourage customers to purchase from you and not your competitors?
Marketing consists of both the awareness of your products and convincing people to buy from you. Your marketing plan needs to contain both of these elements and may also include the following:
- Offline and online advertising to communicate your company.
- Clear and concise messages on all your materials.
- A pricing and discounting strategy to highlight your position in the market with the margins from each product or service.
- Delivery and post sales customer service plans.
Without customers, you'll make zero sales so pay attention to the detail of your marketing before you launch any products.