INSIGHTS: How a Business Plan increases the chances of success
Updated: 5 days ago
Where do you want to go?
A Business Plan is a key document that summarises your business strategy going forwards. Simply put, a business plan defines your objectives and explains how the business will achieve these goals over a specified period.
Working on a detailed business plan provides clarity to business owners and the leadership team. By defining clear goals and objectives, timings, and the steps needed to achieve these plans, a business plan acts as a comprehensive roadmap for the future.
Creating a plan is an essential exercise for the senior leadership of businesses to work through as it will help management assess the feasibility and potential of the business, and set the right targets. You may have heard of the SMART acronym – that is Specific, Measurable, Achievable, Relevant, Time-based. A comprehensive and effective business plan will set targets which are SMART - and a business plan which is well thought out and structured in this way sets you on the best path to achieve success for your organisation.
Many studies have shown that having a business plan increases your chances of success.
What’s in the plan?
A strategic plan typically contains a number of sections.
Business Vision – what is the overarching goal of the business?
Problem addressed - What solution does your business provide to its customers?
USP – Why should your customers choose your business?
Market size and competition – this will inform your business growth potential
Product/Service – a high level list of your produce and service offerings
Strategic plans to implement – a summary of your agreed strategy by project
Sales and Marketing plan – an understanding of how the sales and marketing functions can help grow the business and improve customer acquisition
Operations – how will the business deliver the plan effectively in terms of personnel, systems, technology and processes?
Team – an assessment of the current leadership and management teams, and identifying if they need to be strengthened or better structured
Financial forecast – translating the plan into estimates of future revenue, profitability and cashflows
Funding required – will the business require investment or debt facilities in order to execute its goals?
The above guide is not a rigid template – it is intended to give you ideas on how to approach the creation of a business plan - each business is different and a good plan will be tailored to suit the individual organisation’s needs.
There are many reasons why the business plan, and the very act of working on a business plan is extremely important and valuable.
Setting of objectives
Creating milestones and targets naturally makes reaching them easier – how can you achieve business success if you haven’t even defined it?
If you and your team have worked together to produce a clear plan with goals, timelines and responsibilities, once it is agreed and signed off there is nowhere to hide. There is transparency and a clear ownership of tasks.
Going through the process sets a standard and adds discipline and a level of professionalism which you will require from your management team as your business grows.
The process steers the leadership into researching and fully understanding the market the business operates in. This may lead to new concepts and plans to improve the offering.
Formulating an effective plan will challenge management by requiring the definition of a customer and their needs. Whether this is achieved by questionnaires or something less formal, a number of key insights could be gained here to inform the overall strategy.
Marketing and sales strategies
Defining more clearly the sales and marketing strategies will make them more effective, a key consideration given the often high cost of marketing.
A strategic document can also add credibility and weight when the business is raising funds, whether this is investment or debt.
Participating in building a detailed business plan should energise the leadership team as they have all contributed and have been heard during the process. The leadership team will also be fully aligned by the exercise.
Building the right team
Having a cohesive plan will also enable the leadership team to ‘sell’ the business to the right stakeholders, for example attracting better quality employees who are attracted to the vision and share the same values as the business.
Putting thought into the organisational structure and processes will inevitably lead to a more efficient, smooth running business – particularly if it embraces technology and automation.
A good strategic plan enables clear communication of where the business is going to all relevant stakeholders – eg shareholders, debt providers, employees
Understanding the financial requirement of the business
Translating the plan into numbers will inform the viability of the various aspects of the strategy. It will lead to a better understanding of the risks, challenges and opportunities. Have the projects been properly costed and analysed? Will the business require any funding? How will the implementation of the strategy impact revenue and profitability? The financial projections will allow you to track progress and measure success. This exercise is essential to the process.
Making the right decisions and reducing risk
Ultimately, a good business plan should facilitate better decision making by leadership when steering the business forwards.
A business plan is a very effective way to improve many key aspects of the business, and it’s focus on clarifying strategic goals in a SMART way increases the chances of business success.