What is a Business Plan?
A Business plan is a term that is commonly thrown around, but no one really knows what one is, how to use it effectively and what to do with it once you complete it.
Here at Helix we like to see a business plan as a document that forms part of an all-encompassing idea, it's one of the foundational pillars of business and it usually has a couple of different sections. It becomes the framework that tells the story of where you are going and how you are going to get there. We often refer to it as a road-map. It is like Yogi Berra once said "If you don't know where you are going,
you'll end up someplace else." ― Yogi Berra
A good Business Plan should be tangible and fluid to see through the start, middle, ongoing successes, changes and fluctuations of your business. Something that does not collect dust on the shelf but rather an evolving document used as an integral, strategic tool to refer to and continually track your businesses growth. Often it feeds your business mindset and behaviours.
What goes into a plan and what is the aim?
The components that make up your Business Plan are your Research Analysis, your Competitive Marketplace Positioning, your Financial Summary and then your Goals. You're answering the questions; Where is this business going, what does it looks like and what will the outcome be?
A Business Plan holds you accountable and sets metrics which you can track and create data for you to benchmark and analyse your business. They might sound like big words but at the end of the day all it is doing is making sure you're on the right road going in the right direction to the destination that you want to go.
The point is to make your plan a behaviour, a habit where it is innate in the way you manage your business. Where you continually stay on track and become self-accountable as to the direction in which your business is going, and how your decisions are impacting this progress. As opposed to just flying by the seat of your pants, and hoping that it works out.
Key Reasons to use a business plan
1. It Creates an Action Plan - As mentioned above a Business Plan creates a road-map or action plan in which to operate. It gives you direction in times of doubt and maps out how to achieve your goals and manage bumps in the road that may pop up. Without one you may shift off the route and lose track of your long-term goals completely and not even know it's happened.
At Helix we like to start with a 5-year plan. Break that down into each year. Create your budgets and your cash flows projection for each individual year. Then build your action plan of what has to happen to achieve those milestones, and put deadline goals on them. At the end you'll have this five-year stepped road-map, with a really tangible framework of where you're going in business, why you're going there and how to get there.
2. Helps you make sound decisions ;A business plan helps bring focus and clarity to your ideas and simplifies the decision making process
3. To establish business goals and milestones - A Business Plan clearly lays out the long-term goals that are most important to the success of your business. Make sure your goals are achievable and they're actionable because otherwise what's the point right? One question you might ask yourself to help set your goals is: where do you see this business in 5 years time? What does it look like? What does it feel like? What is it turning over? How does it affect your life?
4. Helps to identify any weaknesses - The process of creating a Business Plan helps you identify potential pitfalls in your idea and allows you the space to brainstorm on how to avoid these, and in turn uncover new opportunities. It will allow you to clearly share your plan and ideas, and seek help from experts and professionals who are in a position to give you invaluable advice to minimise any drawbacks that could come along. If you're already in business, it helps you take a step back and look at what's working and what you can improve on.
5. To document your competitive market positioning (CMP) ;Essential to the growth of a business are your strategies and tactics that you use to reach and retain your customers. The Business Plan will help outline what your advertising budget will be, and what price you charge for your product to compete with the market. It helps to define your company's role in the marketplace. The strategies you use should be continually evolving so revisiting your CMP at least once a year is critical.
6. For external funding – A Business Plan is integral when applying for financial assistance, like business loans and Government Grants. These Lenders and Institutions will often ask to see a Business Plan when assessing your viability of their offering. Often it is the make or break between a bank giving you funding or saying sorry, no chance, or qualifying for the grant your business desperately needs.
7. To communicate with investors, stakeholders and suppliers – A Business Plan is a communication tool that can answer Investor questions such as: is there a need for this product or service, what are the financial projections, and how will I make a return on my investment? While Investors will generally want to meet you in person before writing you a cheque or working with your business, in nearly all cases, they will also carefully review your business plan and financial statements.
Creating a Business Plan is an investment in your business and a worthwhile one at that! Particularly in the very early stages.
If you feel like it's not your element, then get some help! Have a conversation with someone where it is their expertise and get some support in doing it. Also, don't be scared of paying for it either, research and planning are the two key fundamental things of a successful business, and they require a decent investment of money and time.
Writing a good Business Plan does not guarantee success, but it can go a long way toward decreasing the odds of failure. It's taking the time to come up with these plans and ideas and executing them which can be the key difference between a business that fails or just survives, and one that thrives.