I recently started a discussion about business plans on linkedin (see it here). I got mixed results. Some people didn’t read the question, whereas others provided helpful advice. I was asking for recommendations on business plan templates. It can be very difficult if you haven’t set a plan out before to have some software lay it out or make sure you have included everything.
Every business needs a business plan. Creating a business plans take time, research and forces you to focus on your idea so that you can refine it into a plan which you can execute. It is so easy to bypass the business plan and go into action and there are many examples of people who have succeeded doing just that. Jumping straight in is not without risks and you will figure out how to make your business work as you go. It can be an expensive way to learn.
My business plans have always been relatively simple and are on one double sided sheet of paper. Why? because the business plan is for my personal use, so it has to be presented in a way which I can understand and easily refer to. The worst scenario is creating a business plan that you cannot work with on a daily and weekly basis. Some people create amazing business plans which get filed away never to be seen again.
Here are some of the things that may help you when considering a business plan.
A business plan is there to help you.
With startups being all the rage the internet is flooded with business plans for those seeking investors for their app or new tech. When did physical businesses become so unpopular? If you are starting out your business plan is your roadmap telling you what to do, when to do it and how much to charge for it. When you get started, I have always found that opportunities come in waves, if your keen to earn money all and any customers or opportunities will seem appealing. Some of them will prove to be a distraction. Your business plan will help you cost up and confirm which customers to take on and which ones to say ‘thanks, but no thanks’.
A business plan should be realistic.
It’s essential you put together a basic financial plan showing the cost to operate your business, the amount of money you will charge and a reasonable estimate of how many customers you will need and the size of the market. If you have 1000 potential customers and you need 1,000 customers to break even your business will be difficult to make work. It is so easy to be optimistic with your numbers. As a rule you should always be conservative with your numbers, it sets your expectations and then you can exceed them if you do well.
Being too optimistic will make it much harder for you to operate the business, if the numbers don’t stack up, do more research, look at funding or alternative ways to make it work.
A business plan should be be concise.
A 100 page business plan may be great for an investor to see the level of detail, however, you can’t work with 100 pages on a daily basis. You need a clear action plan for your business to get you from starting up through to becoming financially stable. I’ll intentionally keep this point short to demonstrate the point.
A business plan should be flexible.
Things never go according to plan. With people involved things morph and change. It’s a normal process. Build flexibility into the plan. A business plan should have contingency. Your website takes longer to develop, you have to pay for some additional expenses, customers don’t pay as promptly as you expect. These are all contingencies which happen every day in existing businesses. You have to be able to adapt.
There are lots of tools online which can help you develop your business plan, but a word of warning, there is a massive difference between business plan templates and a template business plan. One will help you develop your plan and the other is copy a plan someone else has developed. Don’t fall into the temptation to cheat as it will cost you more in the long run.