That Scary Business Plan
7th October 2008
Business plans have many uses. You may need one to gather your thoughts together prior to setting up your new venture, or you may need one to convince others that your business is worth investing in. Later on in your company's lifecycle, you may find it a great way of showing your staff the direction you are heading, or to borrow more money or to satisfy the requirements of quality standards that you want to be accredited against.
A Business Plan can therefore have internal value because it focuses on what your team can achieve, or external benefit.
Business Plans can be scary things though. We've all admired the extreme confidence of other entrepreneurs who have developed a fantasy business plan based on sales that they have not made, where no market research has been undertaken with sound foundations. One example I recently saw was £120,000 sales on sandwiches in the next year…….from a newsagents in a deprived area of a City who currently sells around £30 worth a day!! The miracle that was to enable this – a new counter with fridges underneath. No budget was forthcoming for the costs of making these sandwiches or getting hungry customers in!
Once you have real turnover with real customers THEN you can develop a REALISTIC business plan. From my own experience, I have been amazed to find plenty of help if your brain just can't find the right place to start. Many banks provide CD's where you can fill in the gaps, Business Links have experienced staff just waiting to come out and help you free of charge, and MBA student love this type of project (contact your local University). They will see things from different aspects and have access to vast resources that most small businesses cannot afford.
My 7 step plan based on experience is as follows:
- One for the networking events and sales team – develop an Elevator Pitch
- What is the sincere purpose of your company – your Mission statement
- A simple sales plan – Who are your next 10 customers? What are you going to sell them? By when?
- Who have you got on your side to help you – strategic alliances? It could be the support of a key supplier, a bartering arrangement with a complementary company for marketing, a specialist adviser etc.
- An action plan to achieve your sales plan – in detail, so you can monitor your progress, including identifying the potential hurdles you have to overcome.
- Your team plan, sometimes called a people plan. Who will you need and when? Where will you get them from and what will they cost? How will you train them? How will you keep them on board? How will you know they are performing? Etc.
- The financial bit – in detail. Accountants are only too willing to help with this one and have the advantage that by nature they tend to be cautious, which will make it more realistic!
Finally – the number one rule that has kept me in business through recessions since 1991 is
IF YOU HAVEN'T GOT THE MONEY IN THE BANK ACCOUNT DON'T SPEND IT!!
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