Why you need a business plan
A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts.
A business plan helps you to:
- clarify your business idea
- spot potential problems
- set out your goals
- measure your progress
You’ll need a business plan if you want to secure investment or a loan from a bank.
It can also help to convince customers, suppliers and potential employees to support you.
Initially, you should aim to convince yourself that your new business idea is feasible. There is no point in approaching your bank or a potential investor, until you have researched and proven that there is a real possibility that you can achieve two key financial objectives:
- Make a profit after paying all expected costs, your remuneration or drawings and taxation. Retaining profits in your business year on year will gradually make you independent of banks and provide you with the funds to expand.
- Make a decent return on your investment. You should aim to grow your business by an amount that compensates you for the risks you have taken in starting the business. Most new entrepreneurs invest their own cash and you should ensure that your business plan demonstrates that any retained profits, as a percentage of the net assets of your business, is a decent rate.
Find a business mentor
Learn from the mistakes and successes of others. See if you can strike up a friendship with someone who has been successful in business. Someone who you can test out your business ideas and achieve a measure of objectivity.
Take professional advice
Most accountants will have assisted numerous businesses in starting up their business. When you have all your facts and figures to hand take them to your professional advisor who will help you put the finishing touches: prepare the actual business plan.