Your business has more chance of succeeding if you start with clear goals and direction. A solid business plan can also help you in two other important ways.
1. It can lead to increased revenue
A well-constructed business plan should provide clarity on where the business is going and how it is going to get there, says Adelina Lalic, Director and Co-Founder of BusinessBlades, a company which works with businesses primarily in the financial services space to improve their efficiency and profitability. More importantly, it can help grow the bottom line. There is universal agreement that businesses with a documented business plan, that is referred to on a regular basis, increase revenue by in excess of 40 per cent, she says.
2. It may help you get funding
Another compelling reason is that if at any point in time a business owner needs to borrow funds the bank will ask to see a business plan, says Diana Saad, a senior financial planner with Westpac. A business plan is not a guarantee that a bank will open its coffers having one does prove that the business owner has thought deeply about the future and direction of the business. The first-time business is such a big risk for a bank, particularly if there is no property to secure the loan she warns.
A business plan provides a fundamental road map to what the business is doing, where it is are going and how it is going to get there. It is also the document which provides vital information to:
Advisers to the business for example, accountants, financial planners, marketing, public relations and business consultants
Banks which are likely to require this document when the owners go in search of business finance
Venture capitalists/business angels who will also want to see this document before investing in a business
Where to begin with your business plan
Business plans often start quite humbly beginning with a few notes scratched on the back of the proverbial envelope. These early ideas usually progress to something more formal mind mapping on a white board or Excel spread sheet projections, for example. Whatever format it takes, writing ideas is the first step in formalising the process. It will also help business owners recognise the next steps they need to take and give them something concrete to brainstorm with friends, colleagues and mentors. It's never too soon to start, according to Ms Lalic. "A business plan is the cornerstone of every start-up business and should be prepared at the very beginning," she says. It will help you identify what it is you want to offer, to whom (your ideal client) and how. Once this has been determined you will be in a position to develop a marketing plan that will reflect the business plan.
The best laid plans how to keep it going?
While a business plan should ideally be in place the moment a business hangs up its shingle, it is often a work in progress. In the early days, it may simply outline the business's products, services, ideas, strategies and values. As the business and its needs grow particularly if finance will be required it will need to be an extensive document including full financials. Simple or complex, a few pages or a weighty tome, the important thing is to have one.
Just do it
Paraphrasing the famous Nike slogan, Melbourne-based financial planner, Anne Graham, from Securitor Financial Group's McPhail HLG Financial Planning, says business owners need to just sit down and do it. Do a plan, she says emphatically. Write down what you are going to offer, where you are going to get your clients from, financials are you going to be able to support yourself, if you can't take profit for a couple of years? And what are you going to do to support yourself while building up the business? Is there a line of credit, or do you have another source of income?
A business plan template is useful and the Australian Government has loaded an interactive template for business owners on the business.gov.au website. The 23-page document is embedded with a number of handy tools, including an organisational chart, SWOT analysis table, cash flow spread sheet, profit and loss spread sheet and a break-even calculator to name just a few. The template sits beside a business checklist and very useful guidelines. While completing 23 pages may be a daunting prospect for some start-ups, it doesn't have to be done in one sitting in fact, preferably not and not all sections may be immediately relevant.
This information is current as at 16/12/2013.
BT Financial Group - A Division of Westpac Banking Corporation. This document provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information does not constitute financial advice. It has been prepared without taking account of your objectives, financial situation or needs. Because of this, before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation and needs. Information in this blog that has been provided by third parties has not been independently verified and BT Financial Group is not in any way responsible for such information.