If you’re considering starting a business or currently operating one, you may wonder if writing a business plan is the right step. After all, not every business needs a formal business plan.
What is a business plan?
A business plan is a critical tool for entrepreneurs to map out their business idea and track their progress over time.
A business plan is a written document that describes a business, its products or services, how it will make money, and its strategies for success.
A business plan is also a road map for success, telling you where to go and what to do to achieve your goals.
How To Decide If You Need A Business Plan
So how do you know if you should write a business plan for your startup?
The answer is: it depends. You’ll definately need a business plan if you’re seeking funding from investors or a bank.
But if you’re not looking for outside financing, you are right to question whether you need a business plan.
If you’re not sure, ask yourself these questions:
– Do I need to track my progress and measure my success?
– Do I need to communicate this plan with investors, employees or key stakeholders?
– Is my business regulated by an industry body?
If you answered yes to either of those questions, you should probably prepare a business plan.
If you’re still not convinced if writing a business plan is the right thing to do, here are a few questions to ask yourself:
– Do you have a clear idea of your business model?
– What are your goals and objectives?
– Do you know who your target market is?
– What are your marketing and sales strategies?
– What are your overall costs?
– How will you generate revenue?
If you can answer these questions, you have a good foundation for writing a business plan. You already have a business plan in your head. It’s now time to get all of your ideas down on paper.
What is your goal for writing a business plan?
If you have decided you need to write a business plan, then work its best to define the purpose for writing it.
- Are you hoping to gain clarity on your business idea?
- Are you looking to secure funding?
- Or are you simply wanting to organise your thoughts?
- Do you need a business plan to open a bank account?
- Do you require a business plan to registering your business with a professional body or regulator?
- Recieve planning permission
- Do you need a business plan to secure a property to lease from a landlord or to gain planning permission from a local council?
Figure Out What Type of Business Plan You Need
It can take several hours to write a business plan, so it’s best to find the most appropriate type of business plan for your intended audience.
The different business plans can be categorised by business stage.
Startups usually need either a feasibility or a startup business plan. The trick here is not to spend too much time creating a 50-page business plan when a 15-page business plan will do.
Feasibility Business Plans
A feasibility business plan answers two primary questions about a proposed business: who, if anyone, will purchase the service or product a company wants to sell, and if the business can turn a profit. Feasibility business plans include but are not limited to sections describing the need for the product or service, target demographics and required capital. A feasibility plan ends with recommendations for going forward.
Start-Up Business Plans
New businesses should detail the steps to start the new company with a startup business plan. This document typically includes sections describing the company, the product or service your business will supply, market evaluations and your projected management team. Potential investors will also require financial analysis with spreadsheets describing financial areas including, but not limited to, income, profit and cash flow projections.
Internal Business Plans
Internal business plans target a specific audience within the business, for example, the marketing team who needs to evaluate a proposed project. This document will describe the company’s current state, including operational costs and profitability, and then calculate if and how the business will repay any capital needed for the project. Internal plans provide information about project marketing, hiring and tech costs. They also typically include a market analysis illustrating target demographics, market size and the market’s positive effect on the company income.
Business plans for established businesses are usually much longer than for startups. They include an analysis of past performance, lessons learned, and objectives and goals for the future.
Strategic Business Plans
A strategic business plan provides a high-level view of a company’s goals and how it will achieve them, laying out a plan for the entire company. While the structure of a strategic plan differs from company to company, most include five elements:
- Business vision
- Mission statement
- Definition of critical success factors
- Strategies for achieving objectives and an implementation schedule
A strategic business plan brings all levels of the business into the big picture, inspiring employees to work together to create a successful culmination of the company’s goals.
Operations Business Plans
Operations plans are internal plans that consist of elements related to company operations. An operations plan specifies implementation markers and deadlines for the coming year. The operations plan outlines employees’ responsibilities.
Growth Business Plans
Growth plans or expansion plans are in-depth descriptions of proposed growth written for internal or external purposes. The plan must provide all company details to satisfy potential investors. If company growth requires investment, a growth plan may include complete reports of the company, its management and officers. If a growth plan needs no capital, the authors may forego apparent company descriptions but will consist of financial sales and expense projections.
The benefits of writing a business plan
Primarily a business plan can help you attract investors and secure funding for your business. It can also force you to think critically about your business model and how you plan to achieve your goals.
Additionally, a business plan can help keep you on track as your business grows.
Writing a business plan takes time and effort. But if you’re serious about starting a business, it’s worth the investment.
Even if you don’t use it as a formal document, creating a business plan can help you crystallise your thoughts and make sure you consider all the critical aspects of your business.
Let Us Help You WIth Your Business Plan
Whether you need a business plan for investment, funding or internal management we have a number of business planning services available. Visit our business plan writing services page and fund out how we can help you.