By Josh Hall, Business Correspondents, SimplyBusiness.co.uk
A well thought out business plan is amongst the most important documents any business can have. It should provide you with a framework for growth and success, allowing you to play on your strengths and mitigate your weaknesses.
But drawing up a business plan can be a time consuming task. Luckily, once your existing plan expires you can recycle many of its elements to help you create a new document for the period ahead. Here are some top tips for recycling your business plan.
• Keep your calculations
Look back on the predictions and forecasts contained in your last business plan. How well do they compare with your actual results over that period? If your results came in close to your predictions, you may wish to adopt the same assumptions and calculations for your next set of forecasts.
Of course, this will only work if you do not expect to see any major shift in your business model over this period. Similarly, if your predictions were inaccurate (as is so often the case), you will need to go back to the drawing board. Try not to be over-optimistic; this can only lead to cash flow problems later in the period.
• Benchmark results
Where possible, try to benchmark your results against your competitors. How did your closest rivals fare over the period covered in your last business plan? Did they record better results? If so, something needs to be tweaked in your own plans.
If your competitors are expanding more effectively than your own business, consider ways that you can harness the new opportunities that will become apparent as the economy continues to recover. You may need to secure new finance, and a comprehensive, realistic business plan will be a key factor in determining whether or not this is possible. If you intend to seek financial backing with your new plan, make sure that it highlights the positive elements of the previous period’s results, without skating over the firm’s weaknesses. Overlooked or unexplained figures will not go unnoticed by potential investors.
• Be ready to change
Your business plan should be a living document. Although the aim is to meet or exceed your forecasts, it is important to remember that circumstances can change very quickly. You need to be flexible about the contents of your plan in order to account for this. For example, if a key supplier were to go bust, how would this affect your prospects? You need to be able to quickly and accurately alter the document — and this means ensuring that key members of staff are aware of its contents.
• Make contingencies
On a similar note, things may not go quite to plan during the period covered in your new plan. If sales fall short of forecasts, or your costs are unexpectedly increased, you need to ensure that you are still in a position to meet your financial liabilities. You should always factor in a contingency fund to ensure that any troughs in cash flow can be smoothed over. The size of this fund will differ from business to business, but it is generally expected that you should set aside at least 10 per cent of turnover for emergencies.
As daunting as it may seem, drawing up a new business plan need not be a painful experience. Take what you have learned from the previous period and apply it to your new document. This will help to ensure that you end up with a realistic business plan capable of guiding you through both good times and bad.
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