They say success comes to those who plan for it. However, a study by Barclays has revealed that more than 20% of SMEs have no Business Plan in place.
With most owner-managers already struggling to keep all those plates spinning, it’s understandable that they find it difficult to justify spending time writing a Plan. The issue is whether spending all that time in the business, rather than on the business is down to the alarming statistic of 80% of businesses going bust within the first eighteen months [research by Bloomberg].
Below, we’ve collated some great tips on why creating a Business Plan should be your New Year’s resolution.
“By failing to prepare, you are preparing to fail” – Benjamin Franklin
A well thought out, thorough business plan is a valuable tool in helping you reach long-term business goals by giving direction and defining objectives. The plan will also help you manage possible issues that could emerge along the way by having contingency plans in place. A business plan will also help to assess whether your strategies are working and to make the most of new opportunities as they arise. Prioritising and managing your resources will contribute to the success of your business.
Taking the time to write a business plan will give you the chance to learn more about the industry and competitors. Focus on the market you sit within, identify your current position and where you want to be in the future – set specific goals, timeframes for achieving them and how you’ll measure performance. To have further control and to be well prepared, it is recommended to identify challenges that you may come across and implement contingency plans to avoid or overcome negative outcomes. Business planning can seem an overwhelming and time-consuming process, but in order to be successful you should see this as an opportunity.
SMEs that had a business plan in place in 2013 were consistently more profitable in 2014 than those who did not; while 70% of companies with a business plan making a healthy profit due to their organisation, planning and preparation.
It’s just as important to keep your business plan relevant and up to date once it has been created. Your business plan shouldn’t just be a document written once and filed away; it must be an ever-changing, live document that mirrors a growing and changing business. It is advised to set reminders or schedule internal meetings to review your business plan regularly, so that you can accommodate changing circumstances in the plan. This is an excellent way to get employees involved to ensure that everyone is on the same page!
A well-researched business plan shows how serious you are about your business, and will demonstrate to lenders why they should invest. They will only be willing to invest if they are confident your business will be successful and they will get a profitable return. Your business plan will outline your predicted profits and income streams. A marketing plan is an additional method of attracting funds alongside your business plan, yet 86% of businesses do not have one in place.
RECOMMENDED TOOL: The Prince’s Trust business plan pack
Business Plan Checklist:
One of the most vital parts of starting a business is the plan. Get it right and you will earn the trust of staff, investors and suppliers, but get it wrong and the company could experience vast problems even getting off the ground, let alone growing. Consider the following points in order to expand your business, increase competitiveness and achieve set goals:
- Exactly how and why you will run your business, and whether it is feasible
- Map the future of the business
- Include financial forecasts and breakdowns
- Demonstrate detailed market research
- How many employees you will need to succeed
- Update your plan regularly, factoring in changing conditions
- Prove to investors your business is a reliable investment opportunity
- List specific goals and objectives, along with realistic time scales
6 Ways Your SME Could Fail:
- Leadership failure
- Lacking value and uniqueness
- Not being in touch with customer’s needs
- Unprofitable business model
- Poor financial management
- Rapid growth and over-expansion