Whether you are just starting out in business or are an established business, the simple answer is YES.
The plan will look different depending on what stage of development you are at.
The main reason most people prepare a business plan is to help raise money from investors or secure funding from a bank. In both cases, it is essential that the plan sets out clearly what the business does, how it will operate and the funding required to setup and operate the business.
A business plan can also provide many other benefits to new and existing businesses. These include:
- Test the feasibility of your business idea
- Helping you step back to think strategically about your business
- Forces you to think realistically, objectively and unemotionally about your business
- Allows you to plan the growth of your business and associated capital requirements
- Highlights if your financial projections reflect the strategy you have set out for the business
- Helps to ensure that all aspects of your plan are clear and integrated.
Common mistakes made
- Unrealistic Financial Projections
Lenders and investors expect to be shown a realistic picture of where your business is now and where it hopes to be, therefore if the plan is overly optimistic with no explanation of the projections, it will ring warning bells.
- Bad Research
The key here is to use relevant research. Using generic figures about the expected increase in economic growth alone just won’t cut it. Your research should be targeted and relevant to the business you are planning.
It can also be used as a great opportunity to understand your potential customers more. Go talk to them and see if what you plan to offer is something that they see value in. The last thing you want is to launch a business that doesn’t meet your customers’ needs.
- No Focus on your Competition
As part of your research, understanding your competition is critically important. Even if you think you have a ‘unique’ business idea and are sure that no other business like yours exists, check and double check. There is no such thing as no competition. If your business didn’t exist, but the customers’ need still existed, where would they spend their money?
Focus on your niche, what differentiates you from the competition, how you plan to compete in the marketplace and paint an accurate picture of what the industry is like now and where you see it going in the future.
- Including Too Much Information
If you were an investor, would you want to read a 200 page business plan? Most investors have a mental checklist of 10 to 12 points that they are looking for in the plan, everything else just gets in the way. The purpose of your plan is not to demonstrate the depth of your knowledge but to focus on the key elements of your business. Clear and concise writing is always appreciated and if you have additional information which you would like to include in the document, create an appendix.
- Being Inconsistent
Highlighting different target markets, quoting conflicting statistics or having competing strategies within a plan will make the reader challenge whether you know your business and its market well enough. Sections of plans are often written on different days or by different people and then pasted together into one document resulting in inconsistency. Take time to review each section of your business plan.
- Poorly written
Spelling, punctuation, grammar and style are all important when it comes to getting your business plan down on paper. Although investors don’t expect to be investing in a company run by English scholars, they are looking for clues about the underlying business and its leaders when they’re reading a plan. When they see one with spelling, punctuation and grammar errors, they immediately wonder what else is wrong with the business. But since there’s no shortage of people looking for capital, they don’t wonder for long, they just move on to the next plan.
Before you show your plan to a single investor or banker, go through every line of the plan with a fine-tooth comb. Run your spell check which should catch spelling and punctuation errors, and have someone you know with strong “English teacher” skills review it for grammar problems.
- Insufficient review
Make sure you ask several people to review your plan before submitting it. It is easy for you to glaze over spelling mistakes and grammatical errors because you know the information inside and out. Another set of eyes will help your plan to look more professional and ensure that it reads correctly.
Get somebody you don’t know to review the plan for you. Family and friends will be a great help but having somebody impartial give you honest feedback can be key.
- Cashflow ignored
Most people think in terms of profits instead of cash. When you imagine a new business, you think of what it would cost to make the product, what you could sell it for, and what the profits per unit might be.
We generally think of business as sales minus costs and expenses, which equal profits. Unfortunately, we don’t spend the profits in a business. We spend cash. So understanding cash flow is critical. Many businesses that had the potential to be highly profitable have failed because they ran out of cash. A business plan is key in identifying the cash requirements upfront so that the founders can ensure they have sufficient cash to give the business every chance of success.
How we can help
We have 3 packages to help complete your business plan
Bronze Package– Access to our easy to use business plan templates (we offer a free 7 day trial)
Silver Package– Expert review of your plan and suggested improvements
Gold Package– Fully prepared plan by an experienced business plan expert