THE IMPORTANCE OF AN ON-GOING BUSINESS PLAN

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THE IMPORTANCE OF AN ON-GOING BUSINESS PLAN

Most potential investors will want to see a business plan before they consider funding your business. Although many businesses are tempted to use their business plans solely for this purpose, a good plan should set the course of a business over its lifespan.

A business plan plays a key role in allocating resources throughout a business. It is a tool that can help you attract new funds or that you can use as a strategy document. A good business plan reveals how you would use the bank loan or investment you are asking for.

Ongoing business planning means that you can monitor whether you are achieving your business objectives. A business plan can be used as a tool to identify where you are now and in which direction you wish your business to grow. A business plan will also ensure that you meet certain key targets and manage business priorities.

You can maximise your chances of success by adopting a continuous and regular business planning cycle that keeps the plan up-to-date. This should include regular business planning meetings which involve key people from the business. A good time to set to do this is in quarter 4, ready for the new business year.

If you regularly assess your performance against the plans and targets you have set, you are more likely to meet your objectives. It can also signpost where and why you’re going astray. Many businesses choose to assess progress every three or six months.

WHAT YOUR BUSINESS PLAN SHOULD INCLUDE:

Your business plan should include a summary of what your business does, how it has developed and where you want it to go. In particular, it should cover your strategy for improving your existing sales and processes to achieve the growth you desire.

You also need to make it clear what timeframe the business plan covers – this will typically be for the next 12 to 24 months.

The plan needs to include:
• The marketing aims and objectives, for example how many new customers you want to gain and the anticipated size of your customer base at the end of the period.
• Operational information such as where your business is based, who your suppliers are and the premises and equipment needed.
• Financial information, including profit and loss forecasts, cash flow forecasts, sales forecasts and audited accounts.
• A summary of the business objectives, including targets and dates.
• If yours is an owner-managed business, you may wish to include an exit plan. This includes planning the timing of your departure and the circumstances, e.g. family succession, sale of the business, floating your business or closing it down.

If you intend to present your business plan to an external audience such as investors or banks, you will also need to include:
• your aims and objectives for each area of the business
• details of the history of the business, including financial records from the last three years – if this isn’t possible, provide details about trading to date
• the skills and qualifications of the management involved in your business
• information about the product or service, its distinctiveness and where it fits into the marketplace

The main thing to remember is to regularly review your plan and make sure you are on track, especially when the end of year is in sight.

If you would like to know more about business planning or would like our help, please contact Stuart Smith at Watersmiths on 07785 556 450.