Business plans are documents of action; they say what your business is going to be doing and when it’s going to be doing it. They are essential documents for all companies and help ensure decisions are made on the basis of growth strategies.
What is a business plan?
A business plan is a written document detailing your firm’s future based on actions you’re going to be taking and when you’re going to be taking them. They may loosely allocate resources, set milestones and mention specific products and services. Business plans may also include goals and targets, and why these are attainable in the short- and long-term. Firms at all stages should use business plans to map future action; they are not for use only by start-ups, although start-ups will find them especially useful to provide impetus and early direction.
Why are business plans important?
Because business plans typically follow substantial market reseach, they provide direction based on objective facts. Companies following a good-quality business plan can therefore make decisions on the back of considerable data, and be confident in making progress and achieving growth. Without a business plan, companies lack cohesive direction and can find it incredibly difficult to evolve and grow successfully. Investors are also unlikely to invest without a solid business plan that shows evidence of serious growth potential; it’ll also be difficult to attract top suppliers and partners without one
Do business plans follow a standard format?
Most business plans contain similar elements although the exact nature of the plan will vary by company. The three main areas are conceptualisation, marketplace and financials. Conceptualisation includes background details of the company and its goals, including business structure, services offered and strategies for success. The marketplace section describes target demographics and any unique selling points that will be used to beat competitors. Finally, the financial section includes cash flow statements, projections, balance-sheets and break-even analyses. Please see our Sample Business Plan Outline for more information.
How long should my business plan be?
Longer business plans are not necessarily more useful than shorter ones; the right length will depend on your business. As long as your business plan is coherent, well planned and based on good research then length is not important. However, a standard business plan may run between 10 and 25 pages, up to 100 pages or more for a more complex organisation. The number of pages will vary considerably based on the type of industry you work in and the nature of your product or services. New inventions, requiring complex intellectual property protection and expansion into new markets, may feed into substantially longer business plans. Bear in mind that your short-term goals may also dictate the length of your business plan; if you’re looking for substantial equity finance investors will most likely want to see a business plan that covers every angle.
When should I update my business plan?
Don’t think of business plans as one-time documents; they require regular updating to keep in line with your strategy and vision. Significant changes to your infrastructure, goals, market or products should generally be followed by revising your business plan. Examples of these occasions include a new financial period, new product launches, shifting demographics or new management figures. Either revise your current plan or start from scratch; both methods have pros and cons but it’s the endgame that’s important. Ensure the plan reflects your operational and financial goals and you’ll be on the right track.
How do I write a business plan?
Business plans are based on substantial market research which drives your business goals and the action you’ll take to gain market share. Please read our Guide to Market Research for more information. If you’ll collated and analysed your market research and are ready to write a business plan, read our Guide to Writing a Business Plan.