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Writing A Business Plan What Makes A Good One
Not every business needs a 200 page bound business plan. However
every business needs to have some idea of where they want to go
and how they are going to get there. This article covers some
key insights into writing a business plan that get your business
to where you want to be.
The first stage of any plan is ANALYSIS. You need to take a very
objective look at a number of factors that may impact your
business. There are many factors to consider but the two major
ones are competition and your operating environment.
Let's look first at competition. Every business has competition,
even if you think your product or service is unique. How is
this? Well it's quite simple really, people have choices to
make. The most fundamental choice they make in most cases is
whether to buy what you offer or but something else. For example
I could buy a game console or I could buy groceries instead.
Customers only have so much money available so you first task is
to ask yourself what is my competition like and can I beat them?
The more you understand your competition the more you can
develop your business strategy of being different and
outperforming them.
Now let's look at operating environment. This is understanding
what factors around your area of operation are likely to affect
your business performance. For some companies this includes
looking around the World in other cases it's just your local
neighbourhood. You need to ask questions such as:
How is the economy going? What is consumer confidence like?
Where is technology heading in my industry?
After answering all the questions you need to decide how these
might negatively or positively influence your performance.
Now you know more about your competition and operating
environment it's time to set some OBJECTIVES. This is what you
want to achieve in the period your business plan covers. It is
said that good objectives are SMART. That is specific,
measurable, achievable, realistic and targeted. Here's an
example of a SMART objective for a hypothetical business.
"By the end of this year we will have increased sales of product
X by 7.5% over the previous year."
You can see how clear this objective is. It is much easier to
achieve high performance with clear objectives.
Now you need to outline your STRATEGY. How are you going to
reach you objective(s)? This is where your marketing plan often
comes in as it helps describe the programs you will run to
achieve your desired objective(s). To continue the example above
our strategy may be to gain distribution for our product in one
new major retail chain.
To make your strategy work you must then allocate appropriate
RESOURCES. Certain things will need to be provided to reach your
goal. This could be dollars, people, equipment, etc. Your plan
must have included the resources you are allocating and why you
believe this is adequate to get the result.
Every business plans also has some PROJECTIONS. This is your
basic financials that you plan will deliver. Are you expecting a
profit or loss? How much?
Lastly you need to allow for CONTINGENCIES. Things change all
the time and your plan needs to consider these possibilities in
advance. A good way to do this is to ask What if?
What if a new competitor enters our market? What if a
distributor delists our product? What if interest rates rise?
Your analysis should give you some idea of likely contingencies.
It saves a lot of stress if you have some documented ideas for
dealing with them before they become a big problem.
Writing a business plan is never perfect, the plan is on paper
and you're operating in the real world. However a good plan can
really guide you in the right direction. Take time to put real
thought into preparing your plan an above all make sure you USE
YOUR PLAN!
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