Top Tips for Creating a Successful Business Plan
Constantly updating your business plan can help your organisation survive – and thrive. “Fail to plan and you plan to fail” is more than just an old adage – in business, it’s a fact. According to the Harvard Business Review, start-ups built on a formal business plan are 16% more likely to survive – while research from the University of Oregon, 20% of new businesses with plans in place are more likely to enjoy growth and almost twice as likely to attract investors. Here are top tips for creating a successful business plan:
“A business plan is essential,” says Mark Hegarty, founder of Cork-based business consultancy Irish Formations. “It’s a roadmap – a formal statement of your goals, giving you direction and guidance and an indication of the robustness of your business model.”
So what makes a good business plan?
1. Know your audience
“The first thing to consider is who you’re writing it for,” says Mark Day, writer at Irish Business Plans, a consultancy in Athy, County Kildare. “Investors, grant-givers and lenders need detailed financial information and forecasts, but a plan for an internal audience can target goals to keep you and your team focused on the core strategy and development of your business.”
2. Roll with the changes
Sean Murray and Alan Hickey set up innovative app-based same-day B2B delivery service WeBringg in 2016. The Dublin-based business has since moved into Europe, Australia and New Zealand, and the pair now have their sights set on the US.“We started with a concept and built a plan around it – which enabled us to spot and iron out flaws,” says Murray. Indeed, writing the plan took the pair away from the original idea, conceived when Hickey forgot his wife’s birthday and couldn’t find a same-day company to deliver her a present.
“We developed a crowd-based delivery service to connect retailers and consumers from store to door,” adds Murray. “But by planning, we realised it would work much better as a B2B idea, so drawing up a business plan changed both our service and our market.”
3. Seek advice
A key decision for WeBringg’s founders was to get independent advice from their Local Enterprise Office (LEO). “I’d urge anyone to put their plan in front of someone else,” says Murray. “LEO Fingal poked all sorts of holes in it, and asked us excellent questions about things we hadn’t considered or had misjudged. How did we plan to get retailers on board, for instance? And what functionality would they need – would their websites know the level of live stock on their shelves? We realised many didn’t have that functionality.”
4. Plan for growth
WeBringg’s plan didn’t just highlight immediate flaws – solid forecasts enabled the pair to re-evaluate plans for growth. “We thought that maybe after a year we’d double our workforce to four – but the LEO said: ‘If you hit these targets, you’ll need 20 people. Who’s going to clean the toilets? Who’ll do the accounts?’ It helped paint a realistic picture of what our anticipated growth would actually look like.”
“Be realistic and forecast based on fact, not fantasy – both to manage your own expectations and those of any potential investors/lenders”
Mark Hegarty, founder, Irish Formations
Their plan is still evolving – “We’re on about the 40th version of it now,” says Murray – but it’s keeping them close to their principles while they grow. “Last summer we acquired an Australian software company, which means we’re now a group, with a new revenue stream and new product – but all aligned to our business plan.”
The business plan six-point checklist
The building blocks of a robust business plan are largely the same, irrelevant of your industry. The level of detail in each section may differ depending on your audience, but good plans will include the following:
1. Executive summary
“This is broadly a brief synopsis,” says Day. “It should set out what your business is about and the rationale for why it’s likely to succeed. It needs to inform and engage. First impressions count. Potential investors often make an early judgement based on this information, which may even determine whether they read on at all.”
2. Company description
A short outline of what you do, including your mission statement, broad objectives and company history and ownership.
3. Your product or service
“This section explains the ‘problem’ your business was set up to solve and how it’s doing that,” says Day. “Detail why your business is needed, and what sets your solution apart.”
This section might also include such aspects as timelines of bringing products to market, how you source what you deliver, production and operating costs, and an explanation of your profit margins.
4. Market research and market/competitor analysis
Who are your customers and competitors? What other forces might impact your business? “This section examines your business’s viability,” says Day. “This is where you set out a SWOT [Strengths, Weaknesses, Opportunities, Threats] analysis. No business is without weaknesses and threats – good planning is identifying what they are.”
5. Marketing and sales strategy
This should include your objectives, where, how and for how much you’ll sell your product or service, and how you’ll promote it.
6. Financial information/projections and funding requirements
“Outline your historical and projected figures,” advises Hegarty. “Investors are looking at healthy cash flow – both actual and projected.” But, adds Day: “Be realistic and forecast based on fact, not fantasy – both to manage your own expectations and those of any potential investors/lenders. You’ll get more respect, and a greater chance of financial support if your projections add up realistically.”
Adapt and evolve
A good business plan details how you will achieve your strategy. But as Murray says, while the broad basis may remain the same, it’s a document you’ll continue to adapt. “Our mission statement hasn’t changed,” he adds, “but we’re constantly revising it. We had to change it when we applied for grants, and then when we got them. We’re always tweaking our customer acquisition model, targets, revenue streams, marketing, and we’re looking to ramp up our software business next year and expand into new markets. We’re always revising.”
So what advice would he give? “Spend as much time as possible on your business plan. You won’t want to, because you’ll want to just get on with the business, but it’s worth doing, as is inviting someone to pick holes in it, before you start.
“Most businesses don’t fail because they’re bad businesses but because their focus is wrong and you disappear down rabbit holes wasting time on things that, if you’d looked properly, were never going to work. Business plans are vital, so write one, get help, and make it a good one.”
By Peter Taylor-Whiffen
Source: business-achievers.com
