It is well-known that businesses with a business plan are more likely to grow and succeed. What is less agreed is the percentage those businesses grow by! Or what gains they made in efficiency in repeatedly delivering the same product or service to high levels. Nor why it is that always a quarter of UK businesses don’t have a plan.
What actually is a business plan?
Firstly, the difference between a good and a bad business plan is the audience. In other words, know who your audience is. The financial business plan for the bank to approve a loan is different from the plan for a venture capitalist and dramatically different for the one written for internal use. The audience dictate the emphasis placed on the content in order to answer their prime questions. So, an internal plan can have within it, answer key question X by month 3, which would kill it for the banker.
Secondly, a business plan is owned by the organisation and reflects its culture and aims. If it doesn’t don’t be surprised if the internal plan sits on the bookshelf. Or the potential funder stops the pitch and/or starts asking some very searching questions, before saying no.
Most importantly, a business plan is a living document. No-one can predict precisely what will happen in a year or 5 years’ time. Both the outside and company worlds will change. So, any plan must evolve. Which is why the most important work is the discussion before the first draft to test the logic and acceptance of various approaches.
Business Plan Essentials
Any business plan must cover the 9 P’s:
- Position. What is the history of the business briefly to this date?
- Placing. Who are your customers? What do you know about your competitors?
- Products (or services). What is it that you produce in a physical and marketing sense? How does this define the business sector you are in? Are they me-too or a true niche product?
- Promotion. What is your competitive strategy for promotion that creates a distinctive brand and products?
- Pricing. What is the balance between sale price and value set by the market? Does the cost to produce cost everything in? What levers can you pull to be more competitive?
- People. Who is in your team? Why are they there? What are they responsible for? Do they need training or replacing? What is the culture and combined experience of the company?
- Processes. Systems sell and win. What are the operational models from who is responsible for what through to Health & Safety and environmental? What do you have in place to improve systems?
- Pennies. A plan without money is not a plan. It is always good to think of pennies in preparing a plan. This forces justification of expenditure and questioning upfront of the necessity of certain actions.
- Projections. Sensible projections with intermediary points to judge easily the key performance indicators are a given. The projections will be wrong, but making them allows better managers to take the corrective action or understand the outcomes early.
Business Planning Costs
The costs of creating a business plan are bespoke as much depends upon the audience and timing of the business.
Much is unknown for a business start-up which leads to multiple discussions to gain knowledge and agreement. If for funders, the costs for the start-up plan would be off-set by the winning of funding as a percentage fee. If not for funders but an internal document, the plan itself could be very short as it is the discussions and insight which are key.
For established business then it’s often the challenge and innovation that makes the difference. Along with the engagement of different groups of people so that the grand plan tallies with a team’s spoken and unspoken targets. Some companies need just the strategic challenges; others the detailed large plan which is then presented to the whole company as the external imperative. Aka scapegoating the external business planner! If the latter expect our fees to reflect this.