With the current economic recession taking its toll on small businesses everywhere more and more emphasis has been put on the lack of financial help being provided by the UK’s banks. But what can you do to help your business to ride out the rest of the recession?
Ensuring that you have a cohesive business plan is a start. According to a study by the Bank of Cyprus UK 46% of small businesses out of 500 companies reviewed lack a business plan of any kind.
There are a number of elements you should consider when writing a business plan such as who will read my business plan? Let’s take a look at who your business plan will (or could) be aimed at:
1. You – the business owner. If you write a long-term business plan (i.e. 3 – 5 years) then it is important to retain a sense of what you are doing and what you want to achieve. The trick is to stay focused on your goal – having your business plan to hand can help you do this by reminding yourself of your business’ aims and objectives.
2. Potential investors. Partners, friends and colleagues won’t want to invest in something that seems implausible – no matter how much you might believe in it unless you can show them an intelligently laid-out plan that can clearly show them that your business has a clear, long-term goal as well as how your business could benefit from further investment from them.
3. The bank manager. Not everyone can rely on friends, colleagues or family to invest in their business, besides, not everyone has a lot of money to invest these days. So the next best thing is looking to your bank for overdrafts, commercial credit cards and loans. The majority of bank managers require small businesses to produce a coherent, well structure plan before even considering an offer of a loan let alone extended lines on credit cards or overdraft facilities.
Now let’s take a quick look at what you need to consider when writing a quality business plan:
• If you are starting a new business your plan needs to assess every aspect of the business and show how it can be successful.
• If your business has been established for a while but you are in need of investment then you will require a business plan to convince those investing capital into your company that you can and will make it successful.
• Who is your business plan for? This is a very important question as you will need to tailor it to the reader’s requirements and present it in a concise and logical format. This should help the reader to gain a good understanding of your business and make decisions based on the information you have presented them with.
• Consider the strengths and weaknesses of your business. This will help you to take advantage of your strengths and aid you in turning weaknesses into strengths.
• Writing a business plan yourself allows you to analyse your business at the fundamental level – without understanding your business from the ground up how can you ensure your company’s growth and maintainability?
• Research your market thoroughly and understand your competition. Without a clear understanding of the market you’re entering how can you expect to compete in the industry? Understanding your competition will allow you to identify how big the barriers to entry are and more importantly – are you able to compete at any level with the existing players?
• What opportunities are there? Without including this in your plan it is a sure-fire thing that investors will put their money in something more secure like a savings account, shares or another business.
• All key areas should be included in the plan – including, your product or service, the market, competition, the management team, marketing and sales, operations and finance.
• It’s important to calculate your costs however; a more crucial factor to the success and failure of a business is the level of sales. It is therefore a requirement to produce a cash-flow and break-even chart. This should clearly show the reader how many sales need to be made to ensure that all costs are covered.
• Have your business plan reviewed by a detached individual who can offer constructive criticism on all aspects of your plan. Once reviewed elements of your plan may need to be revised.
There is of course so much more to writing a business plan – I have included a number of links to resources and information that could help you: