Creating a business plan. This is a topic of much controversy. Traditional business theory enforces the importance of a business plan. In contrast, the world of agile startup business says don’t waste your time. Make it up as you go along because you can pivot when things are not working.
Whichever way you look at it, your business (or business idea) needs a plan and this is important. Not having a plan is just stupid because if you don’t have a plan then how will you know when things are not working, in order to pivot? Conversely, how will you know when you’re hitting all your milestones?
There are a few key items that need to go into any business plan. Before reviewing these, one needs to consider the importance of a business plan. It’s often thought that creating a business plan is a once off activity. Usually to secure a loan of some sort of investment. While these are valid reasons to create a business plan, a business plan is important for many other reasons.
Your business plan will lay out exactly what you plan on doing, and how you plan on doing it. It provides a checkpoint to help you understand how you are progressing against the plan and will highlight where you are not progressing.
A business plan does not need to be a massively complex document, and should at a minimum contain the following bits of information.
- Your industry and your company. This will need to describe both your planned business and the market that you’ll operate in. You’ll need to cover your business model, your products and services, and the market entry and growth strategy.
- Market research and analysis. Here you’ll need to go into a little detail about the size of the market, the opportunity, competitors, etc.
- The economics of the business. You need to describe how your business will be making money and also some key performance indicators.
- Marketing strategy. This should cover Product, Price, Promotion. Place, Packaging, Positioning, People.
- Product and service development. This should lay out your thinking about how you’ll develop your products and services over time to meet the changing market and changing needs of your customers.
- The management team. Provide the proposed structure of your organisation, the roles, who will be filling these roles, and their bios.
- Critical risks, assumptions, and problems. Identify and mitigate any risks within your planned business, specifically those arising from any assumptions (financial or otherwise) of the business plan.
- The financial plan. This section should follow on from point three and provide a more detailed set of number in the form of a profit and loss statement (income statement), balance sheet, and cash flow statement.
- Proposed company offering. Describe what you are looking for from investors and what you will provide in return.
In summary, imagine going into any pitch, Dragons Den, or Shark Tank and not having the answers to the nine points above? You’ll be eaten alive!
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