Why do I need a business plan?

A business plan is necessary for three primary reasons:

• It gives business owners a current assessment of the business as well as a roadmap for the future.
• It helps a business grow, both organically and through outside funding.
• It is essential to have an up to date business plan in order to secure financing, ranging from an overdraft facility or bank loan to venture capital and business angel funding.

A business plan is a tool for decision making - remember this and remember who it is written for - then design it to suit.

The business plan is a living document that should be continuously reviewed in light of the business environment and actual performance. This enables the directors to oversee business performance.

When to use outside help

For a business plan to be effective those who will have to implement it should own it. So, it cannot just be delegated to a consultant. But an experienced business facilitator can add value to the process, whilst ensuring that ownership is in-house.

Objectives

The objectives of the business plan are first to develop and communicate a plan of action that will achieve the company’s strategic objective. Then to provide a means of monitoring progress towards that objective and of stimulating alternative action if the objective is unlikely to be met by the original plan. These cannot be achieved unless the plan defines the strategic objective and includes benchmarks or performance measures at key stages during the year.

The planning process

The planning process is a valuable and exciting exercise that can be a major contributor to team building and a means of developing ownership/commitment to the plan. Involve people, it should end up as “our plan” not “their plan imposed on us”. There are various exercises that can be helpful in the planning process:

• Analysis of current year financial results
• SWOT analysis - strengths, weaknesses, opportunities and threats
• MOST analysis
• Brainstorming - for alternative scenarios, opportunities, strategies
• Profit & Loss and Cash flow forecastsIf the company provides different services or operates in different niche markets these exercises should be checked for each.

John

J. G. Courtney, Chairman
Strategy Consulting Limited
john@strategyconsultinglimited.co.uk