Why do I need a business plan?

Why do I need a business plan?

The short answer is: 'to raise financial support, and give your business strategic direction'.

There are so many things to do when starting a new business or running an existing business. Keeping and recording receipts and payments, chasing clients, new business, debtors and implementing your marketing strategy to name a few. All these day-to-day activities can make you forget or overlook your long-term objectives.

A business plan is the document in which you establish your medium and longer-term objectives, including financial forecasts for 1-3 years. These objectives and forecasts can change as the business develops, when you acquire new information, and learn more about the market, the industry sector and the rapidly changing business environment. If your initial objectives are recorded you can compare them to current trends and adapt your strategy as necessary.

You also need a business plan to raise finance from banks, sponsors and investors. The plan will show your skills and experience, the projected market for your product or service, how you intend to reach your customers (the marketing), legal issues, the investment required and financial forecasts. All objectives and targets in the plan should be SMART: Specific, Measurable, Achievable, Realistic and within a Time frame.

You may decide to have two versions of the business plan: one specifically for investors, and an adaptation for internal use to assist you to monitor business development, consider minor changes, and remind you of your longer term objectives.

Your plan should be between 10-14 pages long and contain cash flow and profit and loss accounts, and perhaps details of the financial ratios you intend to use to evaluate your success. Other detailed information such as the results of your market research figures, longer term aims and your CV can be added as an appendix.

You will have to provide all of the information, but can access help in putting your business plan together through Creativebias, or other enterprise development agencies.

Olu Olaseinde 2006