In the ever-evolving business landscape, where competition is fierce and standing out from the crowd gets harder with each year that passes, having a well-crafted business plan is not just a formality, it’s a fundamental tool for business survival and success.
Whether you’re looking to refine your business model or steer your company through challenging times, a business plan is the North Star that guides you and your team. You can refer to it when you need a reminder of your core purpose, goals, and visions. As your business grows, it can be tweaked and refined to match your changing needs.
Also, for businesses that have a clear plan to raise investment throughout their journey, a business plan is a crucial indicator of a company’s potential for success. It reassures investors of the thoughtfulness and rigor that has gone into defining your business’s objectives, your understanding of the market, and how you’ve used your knowledge and expertise to map out a clear strategy for growth.
1. Start with your purpose, vision, and values
“Truly transformational teams combine their ambitions to their passion and to their purpose” – John Doerr.
You started your business for a reason, and it won’t just be because you want to make money. It may be that you’ve had bad experiences elsewhere in the industry that you want to change, or you’ve spotted a gap in the market that desperately needs filling. Perhaps you’re passionate about running a business alongside strong corporate social responsibility and ethics, or you want to lead the way in creating a truly people-led organisation. Whatever the core purpose behind your business, write it down on your business plan first. It’ll be this statement that will drive how you do business – likely for the better.
From here, think about how your values intertwine with your purpose. What are the core messages that you want to share with the world about your organisation, and how will these values shape your internal team as it grows?
Then, more personally, explore what your vision and desired achievements for the business, and for you as a business leader, are. Not everything on your business plan has to be financially driven. Perhaps a key achievement will be to work less than 40 hours a week, or to be able to take at least four weeks holiday in a year.
The timeframe that you choose for these ‘buckets’ are completely up to you. It could be for a year from now or even ten years from now.
2. Get your finances in order
You know what you’re doing and why. You’ve laid the foundations of your business. Now’s the time to get to the gritty financials. Ideally, you’re breaking your budget down by year as your financial targets will likely change annually as your business evolves.
You’ll need to record your annual:
- Gross Revenue Target
- Gross Profit
- Gross Profit %
- Overheads
- Net Profit
You’ll then break this down by quarter. It’ll look a little something like this:
| Annual | YTD – 1st quarter | YTD – 2nd quarter | YTD – 3rd quarter | YTD – 4th quarter | |
| Gross Revenue Target: | £2,800,000 | £740,000 | £700,000 | £800,000 | £780,000 |
| Gross Profit: | £700,000 | £170,000 | £165,000 | £250,000 | £180,000 |
| Gross Profit %: | 25% | 23% | 24% | 31% | 23% |
| Overheads: | £500,000 | £130,000 | £120,000 | £160,000 | £155,000 |
| Net Profit: | £200,000 | £40,000 | £45,000 | £90,000 | £25,000 |
Laying out financial forecasts gives you a good steer on the year ahead. Additionally, if you’re hoping to begin reaching out to investors to help your organisation grow, financials in a business plan helps investors gauge the viability and profitability of a business venture.
3. How are you going to make money?
It’s all well and good having a financial plan, but you also need to show how you’re going to reach those targets. Understanding who you’ll be targeting – your ideal clients – is a good place to start. And then, what’s your value proposition for those clients? What are you going to offer them that your competitors won’t?
4. Measure success
You’ve got your ideal clients and you’ve got your financial targets, so what does success look like? Now’s the time to plan your Key Performance Indicators (KPIs). Our rule of thumb is to start with just one KPI. Not only does this keep you focused at the start of your business journey, but it also reduces the feelings of overwhelm.
As you become more comfortable in the flow of the business and as you begin to grow, slowly add more KPIs to the list. But, don’t add any more than five if you don’t have to. Simplicity is success.
5. Analyse through a SWOT
Thinking about your business and having a clear plan is important, but understanding how it fits in with the wider industry and market is crucial. Now’s the time to SWOT up and undertake a strengths, weaknesses, opportunities, and threat (SWOT) analysis.
- What strengths does your business have that make you stand out?
- What weaknesses does your business have that you need to address?
- What opportunities do you have in the market that will help your business thrive?
- What threats are on the horizon that could get in the way of success?
A SWOT analysis will help you to understand your place in the market as well as how the market could help or hinder your path to growth and success.
6. Deep dive into your goals
The final aspect of a business plan is a more in-depth look at your short-term goals, the actions you need to put in place to reach them, a list of who will do these actions, and by when. This will not only help keep you and the team on track, but it’ll also ensure you’re not wearing too many hats, delegating jobs appropriately and leaning on your team for support. Most importantly, it’ll break goals down into manageable chunks. Achieving everything you want to in a year can feel daunting, but by splitting these goals into monthly, or even quarterly, actions can help it to feel more achievable.
A business plan is the life and soul of your business. Those one or two pieces of paper will define your business journey and be the guide you need to reach success, whatever that looks like for you. If you need support mapping out and solidifying your business plan, especially the financial elements, our specialist business and financial support team is on hand to help. Get in touch today.