introduction to writing a business plan

Introduction

Planning is a process leading to the formulation of a plan
A plan is the outcome of the planning process
The planning process (thinking, researching, consulting, discussing) is at least as important as the final written plan

Business plans

A business plan is:

A report showing the plans of the business, often used to attract finance from investors and creditors
A document that is designed to provide information about a new business or venture to persuade financial backer to invest in a business

The business plan describes out the market opportunities the business intends to exploit, how it will do so and what resources are required

Business plans & raising finance

A business plan is essential to:

To persuade banks and others to lend or invest money it is necessary to:

Demonstrate the lender/investor has a good chance of being repaid or getting a good return on their investment
Build confidence about the firm and owners’ capabilities
Demonstrate that there is a good market for the product or service

Internal uses of a business plan

Clarify objectives
Provide a sense of direction, purpose and urgency
Plan all aspects and ensure that nothing is overlooked
Provide a checklist to help run and control the business
Monitor progress and success
Improve performance
Improve motivation and communication
Allocate responsibility
Better control and co-ordination and greater consistency
Failing to plan makes an organisation reactive, vulnerable to threats and closed to opportunities

Key planning questions

Stages in business planning

(1) Situational analysis

(2) Objectives

(3) Strategy

(4) Tactics

(5) Actions

(6) Control

Charactertistics of effective business plans

Business plans are more effective if…

They are carefully researched
They contain detailed market analysis
They are used as a reference point for decisions
Actual performance is compared with objectives and objectives are regularly updated
They evolve over time to ensure that growth targets are realistic and challenging

Ten common mistakes in producing a business plan

Failing to plan in the first place
Shrugging off values and vision - these are there to remind the entrepreneur where he/she wants to go
Second guessing the customer - ignore your customer at your peril
Underestimating the competition
Ignoring the firms own strengths and weaknesses
Mistaking a budget for a plan
Shying away from reasonable risk
Allowing one person to dominate the plan
Being afraid to change
Forgetting to motivate and reward