What is a business plan?
A business plan is a document that describes your business, its objectives, strategies, target market and financial forecasts. It's a blueprint to your business's future.
Business plans can vary enormously in length, style and content, but the key is to ensure the document is realistic, practical and regularly reviewed. It should not only set the direction for your business but act as a reference point for measuring performance.
Why do a business plan?
It may seem like a lot of work at the outset, but a well prepared business plan can save you time and money in the long run and help you secure major contracts or funding.
Most importantly, a business plan incorporating a feasibility study will help you determine whether your idea is commercially viable and any issues you need to address or plan for along the way. It will help you:
- apply for finance from a financial institution;
- secure investors, sponsors, suppliers and staff;
- clearly outline your goals and long-term vision;
- determine the commercial viability of your idea;
- examine your business idea from many different angles;
- test your commitment and motivation;
- identify your business's strengths, weaknesses, opportunities and threats;
- develop strategies to successfully operate and market your business; and
- establish measures to evaluate your business success.
What's in a business plan?
There are no rules about what your plan should cover or the level of detail it should contain, but it's worth ensuring it addresses all major aspects especially if you're hoping to secure finance or to use your plan as a tool for managing and monitoring business performance.
A business plan is vital if your business is to evolve in anything other than a haphazard way. It helps you gauge income and expenditure, handle unforeseen circumstances and underpins good business decisions. It provides valuable information to those who work for you or with you (such as suppliers) and assists with the proper allocation of resources.
Moreover, if you are seeking funding for a business idea, having a business plan is critical. You will need to demonstrate to potential investors a strong understanding of how and why there is a need for your product or service. These investors will also need concrete reassurance as to how their investments will be repaid.