Writing Your 1st Business Plan (ebook)

Writingyourfirstbusinessplan©ProjectNorthEast/LiveWIRE19961••WritingyourfirstbusinessplanThebestmanagedbusinessesseeplanningasacontinuousactivityinwhichtheysetbothlong-termandshort-termobjectives.Havingaplanshouldnotbeconsideredastraightjacket,butasawayofensuringthateverydayactivitieshappeninastructuredway.Wellmanagedbusinesseswillseeaplanasaframeworkprovidingtheabilitytobeflexibleandresponsivewhenopportunitiesarise,withoutbeingblowntotallyoffcourse.Knowingthatthebulkofyouractivitiesareperformingaccordingtoplanwillgiveyouthefreedomtoexplorethoseopportunities.Regularmonitoringofhowabusinessisperformingisalsoimportanttodetermineifgoalsandobjectivesarebeingmet.Surveysofsmallandgrowingbusinessessuggestthatthosewhoplanaremorelikelytomakeahigherprofit.Ideally,youshouldwritedowntheresultsofyourplanningprocess-thoughyoumayfindthatyourplanisbestsummarisedasalistofkeyobjectivestogetherwithabudget.Theremaybeoccasions,however,whenyouhavetoexplaintheplantoathirdpartyinordertodemonstrateaproposedcourseofactionforthebusiness.Thisisparticularlysoifyouareabouttostartinbusinessandareseekingfinancialsupport.Whenabusinessisontopofitsplanning,itbecomesaverystraightforwardprocesstosummarisethedifferentelementsintoawrittenplan.Inthesamewaythatabalancesheetgivesasnapshotofthecurrentfinancialposition,abusinessplanshouldgiveasnapshotoftheplanningprocess.••StrategicthinkingManysmallbusinessesthinkofstrategicorlong-termplanningassomethingthatisonlyundertakenbylargebusinesses.Thebusinessesthatsurviveandprosperarethosethatmeettheircustomers’needsbyofferingbenefitstothematpriceswhichnotonlycoverthecostsofprovidingthefeaturesbutalsogenerateaprofit.Todothiseffectively,PeterDruckerargues1thatorganisationsneedtofocusontheexternalenvironmentinordertocreateacustomer.Similarly,MichaelPorterargues2thatthewayabusinesspositionsitselfinthemarketplaceisofparamountimportance.Morespecifically,yourtaskistomatcheffectivelythebusiness’scompetences(thatis,itsknowledge,expertiseandexperience)andresourceswiththeopportunitiescreatedbythemarketplace.Inotherwords,businessesshouldbemarketdriven.Toomanybusinessesthinktheycanprovideaproduct,butareunsureofwhetheritisreallyneeded.Thestartingpointforanybusinessistosetamission,orpurpose,anddefinegoals.Purposedefines‘whatthebusinessdoes’.Allbusinesseshaveapurpose.Forsome,itissimplytomakemoney.Othersdefinetheirpurposeintermsofactivitiesandcustomers.Somealsoincorporateavaluesstatement.Manyofthemostsuccessfulbusinessesaredrivenbyanideologywhichcoversboththeirpurposeandtheirvaluesandwhichprovidesinspirationandguidanceforthebusiness.Definingapurposeisapre-requisiteforeffectiveplanning.1PeterDrucker,“ThePracticeofManagement”,PanBooks,1968.2MichaelPorter,“CompetitiveStrategy”,FreePress,1980.“Planningisaboutpreparingfortheinevitable,pre-emptingtheundesirableandcontrollingthecontrollable.”HenryMintzberg“ThemissionofLeviStraussistosustainprofitableandresponsiblecommercialsuccessbymarketingjeansandselectedcasualapparelundertheLevibrand.”LeviStrauss&CoBusinessplanning2Thegoals,or‘vision’,define‘wherethebusinessisgoing’.Theymaybedefinedintermsofgrowth,orcomparisonswithcompetitors,orevenaboutdoinggoodforsociety.Formostbusinessesitisthevisionthatdrivesthebusinessforward.Insettinggoalsforyourbusinessyouneedtosatisfythreegroupsofpeople:owners,staffandcustomers.Eachwillhavetheirownexpectations:%Theownerswillbelookingforareturnontheircapitallockedupinthebusiness.Thismaybeyours(andyourpartners')butyoushouldstillbeaimingforabetterreturnthanyouwouldachieveifthemoneywas,say,inthebankorbuildingsociety.Ifyouhaveexternalinvestors,theywillbelookingforcapitalappreciationandevidencethattheirinvestmentisbeingwellmanaged.%Staffwillbelookingforrealisticrewardsfortheirefforts,careeropportunitiesandanenvironmentinwhichtheyarehappytowork.%Customerswillbelookingforaproductorservicewhichfulfilsneedandwhichrepresentsgoodvalueformoney.Tobesuccessful,abusinessneedstohavesomeideaofhowitisgoingtoachieveitsgoals.Manybusinessesdothisbysettingoutshorter-termobjectives.Theobjectivesshouldbeactionfocusedandmustbeaccomplishedwithintheresourcesavailable.Thegoalsandobjectivescanbeelaboratedintoabusinessplantogetherwiththeanalysisofthemarketplace,anindicationoftheresourcesthatwillberequiredandthewayinwhichthoseresourceswillbedeployed.1.Whatbusinessareyouin?Whatdoyouseeasyourbusiness?Whoareyourkeycustomers?••PreparingtheplanAbusinessplanisacompletedescriptionofabusinessanditsplansforthenextonetothreeyears.Itexplainswhatthebusinessdoes(orwilldoifit’sforanewbusiness);itsuggestswhowillbuytheproductorserviceandwhy;and,itprovidesfinancialforecastsdemonstratingoverallviability,indicatesthefinanceavailableandexplainthefinancialrequirements.Awrittenbusinessplanishoweveronlyanencapsulationofallofthesecomponentsataparticularpointintime.Yourthoughtsandideasbeforeyoustartedinbusinesswillinevitablybechangedbytheexperienceofstartingandrunningyourbusiness.Yourbusinessplanneedstoreflectyourgrowingexperience.Useyourplantocompareactualexperienceandresultsagainstyourinitialideasandchange