A common question we get from entrepreneurs is if a business plan is necessary.
And our answer all depends on what you believe is necessary. Business owners often view business plans as an extra hassle, especially when it’s only needed as a required document by a third party. But what happens when you need to take stock of all your ideas and projections?
A great business plan can not only represent a business’ scope on paper, but it can also act as a roadmap to success.
So, even if is a business plan isn’t formally required – it has its uses. How do you make it foolproof?
First things first. Not all business plans are created equal.
There is no specific rule which says that a plan needs to have so many pages, chapters or statistics. In order to understand the level of detail, what data and which arguments to include, the writer must first understand their audience. A business plan to be used by the entrepreneur will probably not require the same information needed for one that’s presented to third parties, such as banks or investors.
So, with an audience in mind, what kind of information should you include?
When it comes to writing business plans there are standard areas that are addressed, such as:
- Mission statement and vision Statement
- Company description
- Unique traits of your products and services
- Market strategies
- Operations and management plan
Even if you don’t have any grand ideas for these elements, writing about it in your business plan will force you to consider your options and help you choose a direction.
Now that you have a fair idea of how to split up your plan, it’s time to think about it in context.
A plan for your own use
If you’re creating a business plan for yourself or your inner circle, then detail is not as important as objectivity. The goal of the plan is for you to put down your thoughts on paper so that you can visualise them better. In this way, you can identify any possible gaps in your reasoning or in your business model. The plan itself can be very short, and you can find templates for one-pagers across the web.
Although detail is not necessary for such a plan, critical thinking is. You need to ensure that you’ve got all your bases covered, from your core products or services to the organisation of your business. The thought process which is involved is the same as that used to make a more detailed plan.
A plan for third parties
When you need a business plan that will be read by people outside of your business, you need to include background information and more detailed explanations than you would in a one-pager.
Again, deciding what you would include in the plan depends very much on its audience. A bank might require more detailed financials, whereas an investor would be looking for key people that will ensure the success of the business. Even applying for local and EU-funded grants require particular information to be included.
Once you provide your plan to the third party, it will probably be read by a number of people – your business plan is officially under scrutiny. These people will be checking the plan for several criteria, not least, consistency. There is nothing worse when a plan that says one thing on one page and then says the opposite on another.
Another important element that is often sought is data to back up your proposals and arguments. This is where market research really pays off. Put yourself in the third party’s shoes – their investment in you involves a certain level of risk. This business plan is your chance to prove to them that not only is your project worth the risk – it’s got potential to bring in a return too.
When do I know it’s ready?
A business plan is not a static document – as with your business, your plan will evolve over time.
The point of the plan is not so much to instruct as it is to guide. New business opportunities and changing environments will constantly challenge your business, and having a plan will help you make the right decisions at the right time.
Researching and writing a business plan is a time-consuming effort, especially if you are very busy. NM Group can create your plan and get you funding to cover the majority of the costs. We can also use your business plan to apply for a range of funding opportunities. It’s a win-win!
Get in touch today on [email protected].