So you’ve started your business, but you’ve done it without a business plan? Or you might be a couple of years into running your business and you’re pretty pleased at how far you’ve come, by simply “winging it”?
Business plans are crucial for business success. Without a business plan you increase the risk of planning to fail in your business and the consequences could be huge. The importance of a business plan is not just the plan itself, but the learning that is gained through the process.
It’s not good enough to just “wing it” or expect that your success will continue indefinitely. No doubt you too will hit a curveball that will throw you off course, and if you don’t have a contingency plan or full understanding of the fundamentals of your business, one crisis might be enough to end your business success. Ouch! I know that idea hurts!
When you have a detailed business plan, you can always be on top of how any changes that arise affect the business and you can then be proactive rather than always reactive. Critical elements that any business plan should have are:
1. Vision, mission and purpose statements
What do you want for your business? How are you going to achieve it and what is the driving force behind why you do what you do?
2. Your business
What are the identifying things that make up your business, such as locations, intellectual property, social media, outlets and property / equipment ownership.
3. Your team
Are you a one-man band or do you have employees that form part of your team? Each team member’s title, salary & duties should be included in part of your plan so you can use this to plan your future org chart.
4. Direction and competitive advantage
What is the legacy you want to leave, and how do you set your business apart from your competitors? What does success mean to you?
5. List of products and services
What is it that your business provides? You need to list as much detail about each product and service including revenue & COGS, distribution plan (how are you going to deliver to your customers?) and industry standards.
How much revenue will you produce by selling your targeted products & services, and does the profit margin cover your business expenses? Have you accounted for cashflow variations?
7. Goals and strategies
Once you’ve got clarity of where your energy needs to be focussed, you need to set specific strategies required to meet your goals. Start with the end in mind and work down from your vision, to your goals (long-term and short-term) and then into quarterly actions. Goals must also be S.M.A.R.T (specific, measurable, achievable, realistic and timely).
It’s important to assess your own business needs and what success looks like for you. The process of planning should provide you with answers, identifying problems & opportunities in your business and will give you the peace of mind to predict annual cash at bank, retain positive cash flow and have the profits required to give you the freedom of choices.
The higher the quality of the planning that takes place, the higher the odds of success become. A plan is in the details and if the foundations are solid, you will be far more adept to handling changes and challenges and will be able to make informed decisions rather than reactive ones.
Suzzanne Laidlaw, business reformer and entrepreneurs’ mentor