Why business plans are the recipe for successMadi
Have you ever baked a cake without checking what ingredients are needed or finding out the correct measurements? If you have, the chances are it didn’t turn out as you’d expect. Running a business is much like baking a cake, without following the recipe your business can end up crumbling.
A business plan is essentially the recipe you are going to follow to construct and develop your business. Companies that write and review their business plan regularly grow 30% faster than those without one Writing a plan may seem complex, but it doesn’t need to be 100 pages of words and numbers. Keep it simple, effective and visually easy to follow.
Here are four reasons why you should have a business plan in place:
When starting your company, capital is essential to get you off the ground. You will need materials, office supplies, equipment, a website, advertising to begin with, and then maintenance on top of that. Then comes the cost of acquiring a location for the business, hiring employees then paying them and yourself. Often, the business owner cannot foot the bill themselves and branch out to banks for loans, investors, crowdfunding or turn to family and friends for support. There are also many online resources to assist you with finding the right financial support for your business.
A business plan is the foundation for financial proposals and receiving funding. Potential partners need to see the value of your business and feel confident in investing in your future. A clear and compelling plan will accomplish this.
Understand the market
While writing your plan, you will need to analyse the competition within your target marketplace. Find out what makes you stand out from the crowd and use that to entice potential customers.
With the rise of the digital age there are many ways you can research what your competitors are doing and a quick google is a great start. You can also tap into their website and social networks; Facebook, Twitter and Linked In are all great platforms to learn about other businesses and will give you an insight into their latest offerings, news and upcoming releases.
Conducting a SWOT analysis is a great way to identify strengths, weaknesses, opportunities and threats in your target market.
Strengths: what did you do well? What advantages do you have over your competition?
Weaknesses: what areas do you need to improve to compete with your strongest competitors?
Opportunities: what opportunities exist within your market that can benefit you?
Threats: who are your competitors? What situations might threaten your business?
Once you have examined the 4 aspects of your SWOT, you will have a list of actions to move the business forward. You can build on your strengths, reduce weaknesses and pursue your presented opportunities.
Researching and understanding your competition and customer base in depth is an essential part in any successful business.
Be on the same page
Developing a business plan will allow you to define the overarching goals, objectives and expectations for your business to ensure that everyone is on the same page and shares the same vision. Identify exactly what you want to achieve with your business by using the SMART method to set your objectives:
Specific: ensure they are clearly defined
Measurable: set a figure, value and way to track your goals
Achievable: ensure they are realistic
Relevant: they should relate to the overall business
Time specific: set deadlines to keep the business on track
For example, if one of your objectives is to increase customer satisfaction ratings, your SMART objective might be:
Improve customer satisfaction rating by 10% by reducing help desk call waiting times in the next 6 months.
A business plan needs to include your budget and expected revenue. Being able to present your budgets visually in your business plan ensures that each department within your business has an assigned amount to work with. As mentioned earlier, your budget can also assist with gaining financial support from banks, investors or via other avenues.
To create a budget follow these easy steps, or go to business.gov.au for more information and budgeting templates:
- Establish a time frame, this could be monthly, quarterly or annually.
- Enter fixed costs, these are recurring expenses like salaries, rent, insurance and agency retainers.
- Allocate variable costs like travel, repairs and materials, and one-time spends such as office furniture and a printer.
- Calculate your expected income.
- Pull it all together. You can find many budgeting tools and templates online, or you can seek advice from an accountant, business advisor or bank.
So now that you know all the ingredients to creating a successful business plan, the next step is to write one. Over the next few weeks we will expand on how you can write your own business plan for success!