A Business Plan: Necessary Evil, or Even Necessary?
Do I really need a business plan?
You’ve decided to start a business and the bank manager, your uncle and your old professor have all asked about your business plan. You tell them what you have in mind, but they all say you need a written plan… so do you, really?
3 very good reasons to have a business plan:
- Potential investors, funders, bankers, lenders, overdraft providers will expect to see one. If you are applying for business funding, including grants, you will need a professional business plan so that potential funders can easily assess your prospective profitability. They will also make a lot of useful suggestions, so take that as very helpful advice, not criticism!
- Going through the process will really test whether your idea is as good as you think it is. A properly structured BP will force you to think about every element common to business. Who is going to do the books? What about marketing? How exactly will you market your product or service? How much will accommodation cost etc? It is a lot cheaper to pay for a professional plan with someone who will work through these issues with you than charge into business in an ill thought out way and make expensive mistakes!
- Once you are up and running you can periodically (say monthly or quarterly) check your progress against your plan to see if you’re on track – if not you need to ask yourself does the business need to change, or does the business plan need an update?
How long should it be and what should it include?
Different businesses have different needs and there is no “right” business plan but funders would generally expect to see the following elements:
- Executive summary
- Description of the company and product/service(s)
- Mission, keys for success and unique selling point – what makes your business special?
- Management team outline
- Sales, marketing and operational plans
- Financial forecast (typically 3, or even 5, years forward)
What about those numbers, what do I need to know and to show?
Basically you need to analyse your business to show that:
- You have sufficient funding (cash) to start the business and run it until it’s in profit
- You have considered start up costs carefully
- You know how much you need to sell in order to break even
- Longer term you want to demonstrate that your business will become profitable
- Your business will generate sufficient money (not the same as profit) to stay in business and not become insolvent (unable to pay the bills as they become due).
How about going to http://www.lendwithcare.org/ and lending from just £15.00 to an aspiring entrepreneur in a developing country?
This UK website is facilitated by the Co-operative and managed by Care International. The idea is so simple and wonderful. You lend from £15 to an entrepreneur supported by Care and associated organisations. You should get your money back so you can lend it all over again to someone else in need of help.
This is such a great feeling, helping people to help themselves and then you can help some more.