You may be wondering why you need a business plan in the first place. After all, you have a clear idea in your mind about what you want to achieve. You know the market, you have the necessary skills. So why do you need a business plan?
âFail to plan, plan to failâ, as the saying goes. If you're going to create an effective, successful and profitable business, you need to create a solid strategic plan
Your business plan is the route map that defines your goals, explains your strategy and gives real direction to the everyday running of the company.
So what should you include in your plan?
5 key elements to include in your business plan
To create a truly robust and meaningful plan:
Outline your vision â explain WHY youâre in business and how you intend to add value for customers. For example âWe promote a healthy lifestyle through organic produceâ.
Set out your goals â outline your personal goals as a founder, and your wider strategic goals for the business. Then explain how these key goals are aligned. If your aim is to exit in 10 years, build this into your long-term plan.
Define your funding and budget â to start trading, you need finance, so outline the investment thatâs needed and how youâll access that funding. Then break down this initial investment pot into clear budgets for each operational area.
Forecast sales and cashflow â define the profit number you need, then calculate the volume of sales needed to deliver that income â and give a clear breakdown of the cash inflows and outflows needed to achieve positive cashflow.
Set your timelines for success â set key milestones and give the business some concrete deadlines for meeting the goals, sales and revenues that youâve projected.
12 Steps to the Perfect business plan
If youâve never written a business plan before, it can be a daunting prospect. We firmly believe that this process does not need to be complicated and that your Business Plan should be a document that you refer to on a regular basis. Our Business Plans are a one page document that cover off all the key components of your business. These 12 steps will help you create the perfect one-page business plan.
1. Purpose
This section is all about why the business exists. It should cover things like:
Why does your business exist (in the eyes of your customers; not for you as an owner)?
What are you here to do for your customers?
How is your business different to your competitors?
The goal of this section is to get a short (five to seven words), punchy, clear purpose statement. A really good example is Walt Disneyâs purpose is âto make people happyâ.
2. Vision
Your vision is all about where your business is going and describes what your business will look like in 5 years. This is all about the big picture. Itâs your desired end point and needs to be something measurable. Your vision also needs to mean something to you and be something you and your team can buy into.
3. What we Want to achieve
This is all about getting a clear focus on what the business needs to deliver to you as a business owner. Being in business is tough so there need to be some rewards, otherwise whatâs the point of all the risk and additional stress?
Your business is the vehicle to achieving what you want in your life so we encourage all of our clients to work through what they want to achieve in the following areas:
How much income does the business need to deliver to you personally in the next 12 months?
What will you be doing in the business? Eg your role, hours of work per week, holidays per year
If you are planning a holiday or have a big personal goal, when and where will this be?
4. Values
Values are the key principles or work ethics that the business stands by. They are the values that you as a business owner hold in your heart and are fundamental to how you work as a team, with customers and suppliers. It is highly unlikely that your values will change over time. They are ingrained in you.
If youâre not sure whether something is a value, think about what you would tell your children if they were in a difficult situation and unsure how to act.
The goal is to define the 3-5 values that you and your business live by.
5. High Level Budget
This is all about defining the budget for your business in terms of Revenue, Gross Profit, Overheads and Net Profit Targets. Itâs the high level picture for the year.
We start at the bottom and work our way to the top. So what does this mean?
How much profit does the business need to make? This ties directly into the âWhat you want to achieveâ section above.
How much are your overheads? Start by looking at how much they were for the last financial year and tweak them for any changes you will need to make in the coming year.
Now that we know what our Gross Profit needs to be (Net Profit plus Overheads) we can apply our Gross Profit Percentage to determine the Revenue we need to derive (Gross Profit $ / Gross Profit %).
Once we know the targets we want to achieve for the full year we break that down into each quarter of the year.
6. Key Performance Indicators
Key Performance Indicators or KPIs are the drivers of your business. They are the levers that, if pulled, will have an impact on your results.
For example, there are 5 main KPIs that drive sales: client retention rate, leads generated, sales conversion rate, average transaction value and average dollar sale. KPIs are the things you measure daily, weekly or monthly to track the performance of your business based on your plan.
This section will outline the 5 most important KPIs for you business, what they are now, what your targets are and how you can measure them.
7. Your Ideal Client or Customer
Do you have a clear idea of who will buy your product or service? Another way to think about this is who do you want to work with or serve? You need to be really clear on this aspect of your plan and should consider the following:
Demographics â such as age, gender and social status.
Will they be consumers or businesses. If they are businesses, who will you target within those companies? Maybe itâs the salesperson, or perhaps itâs the CEO?
Location â perhaps a specific area, town, or even country.
Profession â maybe youâre targeting accountants, police or lawyers, for example.
Groups â such as people with shared interests or habits.
Determine whether you'll have regular clients or one-off buyers.
Make sure youâve actually spoken to some of your potential customers.
The goal is to summarise your ideal client in one sentence.
8. Your Value Proposition
Do you know what you offer your clients that your competitors donât? You should consider:
Why should customers choose to do business with you?
What makes you stand out from the competition?
What is your point of difference?
What objections from customers have you overcome that your competitors may not have ? Eg flexible payment terms, value add services.
A simple value proposition statement will be structured like this:
We help target market do topic so that benefit. If you have three main problems then you should call us.
9. Opportunities & Vulnerabilites
Successful businesses think big. You might be starting small, but you donât have to stay that way. itâs critical that you identify the opportunities and vulnerabilities that may impact on your business. Think about:
What keeps you awake at night?
Whatâs happening in your industry that you need to respond to?
How much family time are you getting?
How much YOU time are you getting?
Have you done a SWOT analysis?
You want to brainstorm all opportunities and vulnerabilities that you can think of. Then identify the five biggest opportunities existing in the business right now and the five biggest vulnerabilities that the business faces. These are what you should include in your business plan and should influence the goals and projects you set for the business in the coming 12 months.
10. Goals / Key Projects
Your goals or key projects should cascade from 5 year goals (based on your vision) to 1 year goals to 90 day goals and actions. These are distinct from âquick winsâ which are tasks that will be achieved in less than a month.
Your Business Plan should include up to 4 goals that you want to achieve in the 12 months covered by the Plan. Any more than 4 goals and youâll struggle to remember them and take action to effectively achieve them. Your goals should contribute to and align with your purpose, vision and what you want to achieve. They should also address the opportunities and vulnerabilities that youâve identified as part of this process.
Your 90 day goals will feed off the 1 year goals that youâve just set. Theyâll be very specific and contribute to achieving your 1 year goals. For each of your 1 year goals, set a 90 day goal that will move you towards the end result.
Then brainstorm all the tasks that are necessary to achieve your 90 day goal and assign those tasks to the person responsible. Donât forget to put a deadline on completion of the task. This is critical for accountability.
Donât forget that your goals should always be SMART - Specific, Measurable, Achievable, Realistic and Timely.
11. Keep it Simple
Above all else, remember to keep it simple. Complex and long documents wonât be read â either by you or anyone in your business. If you find yourself getting carried away while writing, stop and take a break. Then go back and edit what youâve written.
Your Business Plan should be brief, relevant and focused. it should be a guiding document that you refer to and review on a regular basis throughout the year.
12. Accountability
So youâve prepared your Business Plan, set your goals and outlined what you need to do to achieve those goals but what are you going to do to make sure that you gain momentum and actually get these things done?
We highly recommend that you have someone hold you accountable through the year so that you actually do what you say you are going to do. Itâs easy to get caught up in the day to day actions of running your business so some accountability will ensure you set aside the time you need to work on your business. We also recommend that this person is independent of you and the business - This means that there are no excuses and if you find the right person for you and your business they will propel you forward to ensure you achieve your goals.
Talk to us about creating a watertight business plan.
Weâll help you define your purpose as a business, and systematically set out how youâll achieve your goals, giving you the best possible blueprint for success.
Get in touch and letâs start planning.
âPlans are of little importance, but planning is essential.â - Winston Churchill