Success in business isn’t always about making the right choice. It’s about making a choice, and learning from the outcomes of your decisions over and over again. To really make the most of these lessons, it is important to have a sense of direction and, often the most sensible compass is the tried and tested business plan.
Your business plan will clarify your business idea and clearly define your long term objectives. It provides benchmarks to measure success and progress and is a valuable document when asking for financial backing.
Set out the key areas before you start
There’s no set formula for a business plan, but roughly speaking, you should look to generate content around the following key areas:
- Executive summary - this outlines your business proposal. Although it’s the last thing to be written, it goes at the front of your plan and gives anyone reading it a quick overview of your business concept and the key factors in making this a reality.
- Mission statement and/or vision statement - this articulates everything that you are trying to create and how you plan to create it.
- The background of your business idea, including how long you’ve been working on the business, any work carried out to date, related experience and proposed ownership and structure of the business.
- Description of your product and service and how this is different - your unique selling points.
- Market analysis - where you currently fit into the market, how you plan to grow your market share, any obstacles you anticipate and how you plan to overcome these.
- How you plan to market the product or service.
- Cash flow statement - this should outline any current and projected financial requirements and how cash flow could impact growth.
- Revenue projections - how do you plan to benchmark your progress? What are your KPIs? How achievable are these?
Who are you selling to? Why should they buy from you? What can your business offer them that they can’t get elsewhere?
Focus on the segments of the market you plan to target - for example, audiences within a specific age group, job title or industry. You can then indicate how large each market segment is and illustrate any important trends that have affected the industry in the last five years, as well as any predicted to affect it in the next ten - what are the reasons behind these? What impact could they have on your business?
It is also essential to carry out thorough competitor research - what are they doing well? What didn’t work? What can you learn from these successes or failings?
Know your message
You know what you do - but will everyone else? When writing your business plan, ensure your message is clear and concise and can be communicated in such as way that someone with no prior knowledge could understand within just a few minutes.
To test this, explain your business to someone totally unrelated to your target audience and establish whether they understand exactly what you do and, importantly, why you do it.
Benchmarking based on available data from similar companies can be a useful way of adding credibility to your business plan - this is particularly important if asking for additional funding. It also gives you something to aim for and helps you measure success along the way.
Further down the line, you will be able to refer to these benchmarks and establish where your business plan fell short or where, indeed, you exceeded expectations. You can then use this information to create further benchmarks as your company grows and will always have something to refer back to from the early days.
Double check the maths
A lot of ideas sound great on paper but a simple maths check can make or break an idea.
Create a financial model to project the ROI from several realistic scenarios - ensure it’s actually possible to hit your targets. To do this, it’s important to start with a sales forecast, which you will need to offset against an expenses budget. How much cash is left? Are there any circumstances that could arise that you didn’t initially think of? Perhaps you’ll need to buy shop space or hire some staff - how does this match up against your income?
Next you need to think about income projections - this takes your sales forecast and expenses and puts them together as a pro forma profit and loss statement, detailing forecasts for your business for the coming three years.
By establishing your finances from the offset and keeping on top of all income and outgoings, you will put your business in good shape for the future.
By Miriam Dervan, founder and CEO of MD Events Ltd