One excerpt from Alice's Adventures In Wonderland goes like this:
“Would you tell me, please, which way I ought to go from here?"
"That depends a good deal on where you want to get to," said the Cat.
"I don't much care where --" said Alice.
"Then it doesn't matter which way you go," said the Cat.
"--so long as I get somewhere," Alice added as an explanation.
"Oh, you're sure to do that," said the Cat, "if you only walk long enough."
This captures the issue so often at the base of a business’ problems – they have no goals, no place they want to get to, so they have no plan for getting anywhere. They are just always going through the daily grind struggling through to the next day.
Deciding on which way to go (strategy) depends on knowing where you want to go (goals). Without a goal there is no plan for getting anywhere - you're just doing a long walk (maybe in circles).
What's in a business plan
Typical content (chapters) in a business plan:
- Executive Summary
- Industry Analysis
- Market Analysis
- Competitive Analysis
- Marketing Plan
- Management Plan
- Operating Plan
- Financial Plan
- Appendices And Exhibits - business model, the marketplace, financial plan
Why every business needs a business plan
A business plan is not just for startups, or for seeking external finance. It's your most important management tool. Avoiding a written plan because you know your business inside and out leaves you rudderless and will ultimately allow too many things you should be considering to slip through the cracks.
Surviving competition and growing your business requires good management - clear objectives, understanding the market, managing money properly as well of course as producing quality products or services. A business plan gives you the information you need to manage your business.
It describes where you are now, where you want to get to, strategies for how you're going to get there, and specific goals and dates so you can track progress.
How a business plan allows you to manage
You use the plan to set and achieve business goals and then monitor progress towards goals.
Where you are now - the big picture, focus on how good your idea / how saleable your product. Reality check.
Where you want to get to - measurable goals, determine strategy, good grip on reality (not wishful thinking).
How do you get there - strategies (maybe more than one per goal). Really hard thinking - superficial thinking does't lead to as meaningful plan.
How to prepare a business plan
- financial and physical outline of business
- strengths and weaknesses
- personal & business goals for short and long term
- action list and timetable
Strategies each have a number of discrete steps (milestones). Alternative strategies (there's usually more than one way to reach an objective) with different inputs and costs can be modelled to show the consequences of choosing each.
Remember to allow for monitoring progress - If you can't measure it, you can't manage it.
Every business plan is unique but basic elements are the same. The planning process needn't be complicated and plan needn't be a big document, but it does require time and effort to collect data and think through strategies.
How to use a business plan
A business plan is only useful if you use it.
Apart from a management tool, it can also be useful in negotiating supplier arrangements.
Circumstances change so a business plan needs regular review
Typical triggers for review:
- Beginning of a new financial period
- You need financing or additional financing
- You have developed/are thinking of developing a new product/introducing a new service
- Significant changes in the market (e.g. shifting customer tastes, altered regulations)
- Change in the scale of your business (taking on additional team members or a partner)
While the preparation of a business plan may not guarantee success the point is that without one you are taking a journey with only a vague destination in mind and without a road map on how to get there
A well-developed plan that documents the ‘wheres’, ‘hows’ and ‘whys’ of your business will focus and direct your activity in harnessing all the necessary resources to achieve success