When you’re busy setting up a business, you’re likely to be told or to find information that says you need a business plan. But what is a business plan? What are they used for? Why is it important to have one set up before you begin? We’ve answered these questions, and provided some further advice for you to follow before (and even after) your company has taken off.
What is a Business Plan and What are They Used for?
A business plan is a written document that provides a descriptive overview of your startup venture, its aims and objectives, and how you intend to set about achieving these things. In its most basic terms it’s a roadmap of your intended strategy, with markers on where you are now and where you want to be in the future, while including points and outlines on intended marketing, financial projections, and operational plans and standpoints in between.
Whether you own a small business or even a larger firm or corporation, you should always be sure that you have a solid business plan in place. Even if you’re already up and running and making profit, it’s within your best interests to regularly revisit and update any plans you have already made. This is because your plan can also become a great tool for measuring the success of your business so far, while offering guidance on which direction to take your company in the long term.
What Should a Business Plan Aim to Achieve?
The most basic purpose of a business plan’s outline is to explain what a particular business is going to do, and how it’s going to do it. However, there are a few other goals it should be aiming to achieve along the way:
Providing an overview of your business as a whole, e.g. your business strategy, action plan, how you’ll make money, and what you need to do to meet your targets
Showing that you have more than a basic understanding of your business and the market you’ll be operating in
Explaining how you’ll be funding your idea
Attracting talent, potential business partners, and distributors
What Should a Business Plan Include?
What you should include in a business plan all depends on the type of business plan you’re going to create. There are two types you can choose from: the traditional format or the lean startup format. The traditional format is the most common, and can be dozens of pages long, while the lean startup is closer to a basic outline of what you’re going to do and may only be one page.
In a traditional business plan overview, you should expect to see:
An executive summary (including a mission statement)
A description of your business
Marketing analysis and details of market strategies
An outline of your management team and personnel structure
An explanation of your business operations
Financial forecasts and strategic plans
A SWOT analysis (strengths, weaknesses, opportunities, and threats)
A lean startup proposal, on the other hand, may include:
A list of key partnerships you’ll be working with
Key activities that show how you’ll have an advantage over competitors
Specific information on key resources
Your unique value proposition (what you bring to the market)
A description of the relationship your business will have with prospective clients and customers
Specific information on your customer segments
A list of your communication channels
Clear information on your strategy for cost structure
An explanation of your revenue streams
Writing a Business Plan
If you don’t already have a business plan in place, or even know where to begin with writing one, then there is no need to be concerned. Our experts here at Halkin have set out a couple of guides on how to write a business plan and how to write a lean startup business plan, and both offer advice and information that should help you to make the best roadmap for your firm to follow.
Why is it Important to Have a Business Plan?
Having a business plan in place isn’t just important for having an overview of your goals and purpose, a way of tracking your progress, or a guide for the direction you should take your company further down the line. It can also help you with a number of other factors and questions that you’ll need to consider when setting up and when you’re first getting started:
Are There Any Problems You Need to Consider?
When you put a plan together, you are going to need to be able to ask and answer some difficult questions about your business (especially if you’re putting forward a proposal to potential clients, partners, or investors). This is going to take some time and may take some careful research, but doing it may allow you to spot gaps or problems with your idea that may make it hard to continue on the path you’re currently following.
Some of the problems you may not spot at first could potentially lead to the failure of your business, such as overlooking how much competition you have, misjudging the kind of employees you’ll need on your team, or misreading the market and trying to sell a product or service no one wants. Getting your plan ready in advance should help you to avoid these.
Proving Your Business is Viable
Your business plan is proof that your business makes sense as an idea and can work in the long run. It allows you to work out exactly how you will make the vision you have for your company a reality.
Securing Financial Investment
Business plans are a key element if you’re planning on pitching or offering a proposal to venture capitalists and other kinds of investors. Having the plan in place lets them see that your company is viable, reassuring them that any money they put in will generate profit.
Setting and Communicating New Objectives
Putting a plan in place for your business keeps you on track with your long-term vision and the strategy you’ve had in mind. It should also help to make all the points you’ve highlighted on the way to success as “markers” seem more consequential, and give you an idea of why they’re important to your business’ journey.
All of these points can then be shared with and easily communicated to your team. Whenever an employee is having trouble understanding the next step and you’re not able to provide an answer directly, they can take a look at the plan to get a better idea of where the company currently is. It’ll also help to keep all of your workers aligned with what your business is doing and why it’s doing it. From this, they should be able to share an understanding of all your company’s long-term objectives.
Providing a Guide for Service Providers
If you’re a small business and you hire contractors, freelancers, consultants, or other professionals to provide services for you (such as accounting or legal assistance), showing them the parts of your business plan that are relevant to the support they provide will keep everyone on the same page.
Understanding the Market Terrain
Writing up and doing research for your business plan should help you to get a better understanding of the market you’re operating in. From consumer trends and preferences with your target market to understanding your competition and potential roadblocks, having a plan written out can help you get an insight into all of these and more.
Business plans can often help you to reduce risk. This is because you will be drawing up revenue and expense projections, setting out a marketing strategy, and devising logistics and operational plans, so you will have a better idea of what you need to do to safely see your business succeed. You’ll be leaving less of your work up to chance and can outline a purpose and strategies that will result in better outcomes for your firm.
Will Your New Business be Looking for Premises?
If your company is starting out with a brand-new business idea and you’re ready to find a stylish practical space to call your work address, contact our team today. We’ll be fully prepared to offer you a flexible tenancy agreement in one of our affordable, high-end London office spaces, so you can pick and choose the location that suits your needs and the needs of your team as your business grows.
Each of our locations offers its own unique personality and community ethos, and we’re more than happy to provide personalisation options if something needs changing to better reflect the ideals and values of your growing firm.
If you’re right at the start of your journey and need to host investors and potential partners to discuss your business plan, we can also lend you one of our state-of-the-art meeting rooms. No matter what you need to get your enterprise onto the next marker on your road map, we’ll be ready and waiting to supply it.