Business General
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Starting a business
Writing an effective business plan
In our experience, small business owners are generally reluctant to spend time and effort developing a coherent business plan, prefering to rely on their judgements and intuitions rather than on a carefully developed plan.
And yet when it comes to going on holiday, for example, we would not dream of leaving it to chance, but plan every aspect in considerable detail. If we are willing to spend time making sure we get the best out of a holiday we should be able to find the time to plan a successful future for our business.
What you get from a good plan
A well thought-out, comprehensive business plan will give you a clear road map to an agreed destination. It will help you monitor progress, secure loans and equity, and ultimately measure the success of your management team. Above all else it will ensure you are proactive rather than reactive - a key element in a successful business.
What goes into a business plan?
Although there is no set formula, a business plan should tell the reader how the business is organised, what products or services it provides, the market in which it competes, historical information, and the aims and goals of the business.
If the plan is to be used to obtain finance you should explain how the capital will be used and the benefits you will derive from it.
You should also indicate how the funds will be protected, how the loan will be repaid, or in the case of equity, the expected return on the investment.
Another essential, and possibly the most difficult, element of a business plan is forecasting. Business owners tend to be too optimistic about expected sales, growth rates, and expenses, which can lead to resources being over-stretched. It is better to be realistic. Forecast minimal results during a business downturn and more optimistic results during stable economic conditions.
A living document
Once you have drafted a solid business plan, don't put it away until next year. Think of it as a living document - one that you will modify and update as circumstances warrant. By periodically checking your progress you will be able to confirm the timing of expansions, or take corrective action before it's too late.
With this built-in monitor, you and your team will not only know how close you are to reaching your destination - you will also stand a much better chance of reaching it.
We would welcome the opportunity to help you develop an effective business plan and put your business on track for a successful future.
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