What is a Business Plan and Why do I Need One?

You probably already know what you want from your business, whether that entails creating a six-figure income or becoming an industry-leader. This is the germ of your business plan. The genuine article will strategically map out both your long term and short term goals, then detail timescales concerning exactly how and when you’re going to achieve them.

What Should be Included?
All businesses are unique, and so are all business plans, but here are a few things which nearly every one should include:

  • The Basic Concept: This is a summary of your business. What is your structure, who are you targeting, what is your product, and what are your central goals?
  • Your Strategy: Normally spread out over 3-5 years, a strategy provides timelines for your specific goals, and information concerning which actions are needed to achieve them?
  • Your Product and Market: Information concerning the advantages of your product or service, alongside a description of your demographic audience, their requirements, and any potential competitors.
  • Your Finances: This is where you work out your profit margins, turnover, and net profit, as well as your various costs. Doing this allows you to determine the exact amount of money you will need to be bringing in each month in order to reach your financial goals.

Why Do You Need One?
Some businesses will need a detailed plan if they are going to talk to investors, while others might be in the process of setting up complex businesses which require extensive organisation. However, even the smallest business can benefit enormously from creating a detailed plan.
Essentially, a business plan gives you focus, and focus is what you need to stay on track. Proceeding without one makes it more likely that you will miss targets and avoid taking important actions simply because there is no guide which tells you to do so. You’ll also be forced to look more closely at your finances and market, preventing you from making mistakes in the future, or even missing out on a potential opportunity.
Finally, a business plan gives you something to review once you have been operating for some time. Using it as a foundation, you can identify areas which are not performing in the way you expected, and alter your mission statement accordingly.

Without a business plan, you’re moving about in the dark. It’s certainly possible to succeed, but your time won’t be as structured, and you may lack direction. Make sure you complete yours as early as possible, and avoid encountering such problems in the future.