What is a business plan?
A business plan is essential to starting a business, but what exactly is it?
A business plan is a written statement of your business; what you want to achieve with it and how you will do that. It should outline the structure of your business, the product or service, the customer, the growth potential and the financials. But as well as giving information about your business it should also inspire you for the future. “A business plan should give you an idea of what you need to achieve,” says Nick Bos, a business adviser in East London.
Every business should have a plan whether it is to open a second shop or float on the stock exchange. It is why you are in business. It helps you to define strategy and, if properly used, will help you involve and motivate key members of staff.
It allows you to work out how to make your business a success and can help you avoid failure by plotting the pitfalls along the way. It should outline a realistic target for how that can happen while remaining flexible enough to make changes along the way. By setting out a plan and some targets, you can also monitor your progress and get the business back on track fairly quickly if anything goes wrong.
Hossain Rezaei, founder of, Pride Valley Foods, used a tree to plan the growth of his speciality breads business. Each stage of the business was mapped out and it is important to reach each one on budget and on time. When you borrow money explain to your backers how you will spend it and what the next stage for your business is. When you have reached that, you can go back and borrow more. “It is important to do it one step at a time,” he says.
His careful planning was crucial in keeping the business on track when a fire destroyed the factory and insurers initially refused to meet the claim. Rezaei kept sight of his original plan but put it on hold while building up the business again. He handed over customers to his competitors, moved back to old premises and approached his backers with an emergency plan. Within six months he had won back his largest customers and the business was back on track.
Every business should have a plan whether it is to open a second shop or float on the stock exchange.