Planning for business success
Running a business without a business plan is like driving blindfolded. Your chances of reaching your destination are slim.
A business plan is not a means to securing financing. Instead, it is a step-by-step guide to running your business and creating the product or service that will be successful in the marketplace. Like any other map, your plan will have to be adjusted according to your vision for the company, conditions and opportunities in the marketplace and the current condition of your business.
Whether it’s formal or informal, every business has a plan. The local hair salon may not have written down its plan, but before setting up shop, a smart owner would have assessed the need for a shop in that area of town, the ability to attract clients there, the appropriate number of chairs, whether to hire someone to do the shampooing and sweeping, the cost of utilities, parking availability for clients, etc. The owner who waits to figure these things out by trial and error will be lucky to be left with his/her wits, much less any customers. A business plan helps to minimize those pitfalls.
To many people, the concept of writing a business plan for their own business is a daunting one. Perhaps it would appear less daunting to view the process as simply answering three questions, namely:
- Where are you now?
- Where do you want to be at a future date?
- How will you get there?
The first question – Where are you now? – must be the starting point. This question seeks to provide a base for planning, e.g.:
- your business idea
- your current level of sales
- your customer groups
- your products and services
- your pricing policy
- your distribution policy
- your promotional activity
- your overall operation
- your employees
- your finances.
Answering the question “Where are you now?” is often a major stumbling block because most people don’t know where to start. However, the answer is surprisingly simple if you divide your business planning into four key areas, viz. operational, marketing, employees and finance. Such a division allows you to analyse your business (or assumed business) to create a solid planning base.
The second question – Where do you want to be at a future date? – is simply asking you to visualise your business operation at a set date in the future. This visualisation process is almost identical to the exercise of setting personal objectives. The difference, however, is that the focus here is on business objectives.
Remember: failing to plan is planning to fail.
The third question – How will you get there? – asks about the steps you need to take in order to achieve the business objectives you have set. These steps, or strategies, can be identified, written down and programmed.
Additional aspects a business plan should consider:
- What is a reasonable expectation of profitability and when?
- How will the business pay you and any team members?
- What are the estimated expenses?
- What is the pricing strategy?
- What is the need for your offering and what profit margins can you expect?
While much of this may have occurred to you informally, it is very import to write it down. If you ever need to approach a bank or investors, you will need it.
Put your business plan in writing
Writing it down will reinforce your vision, give you a reference point for checking the progress of your business and will most likely bring up factors you did not consider when creating the plan in your head. Putting your business plan in writing:
- helps you determine and coordinate all aspects of business operations,
- gives you a means to analyse and determine what might be the best change to boost your business out of a stagnant situation,
- assists you in determining the risks and benefits associated with any changes,
- decreases your chances of making mistakes or not considering important factors in your business, and most importantly,
- dramatically increases your chances of success.
Business plans are not only for those setting out on their journey in the marketplace. They are useful when acquiring a new business, forecasting growth, introducing a new product or service, entering a new market, responding to changes in the market or changing a significant aspect of your business.
The first step is the hardest. Should you need assistance with this and other areas of business development, e.g. raising finance, please contact Exceed. We have business planning protocols and resources especially tailored for small and medium-sized businesses.