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Write a Business Plan

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					How to write a winning business plan
The proof of a good business plan is steady profits. Moreover, any prospective lender will base their decision on your plan. So what does it take to produce a good one? Understand why you need a business plan in the first place. It should be much more than a fancy document to impress outsiders. Used properly, it is a catalyst for creative thinking and so a vital tool to help you develop a healthy business. A survey by Shell LiveWire revealed that those businesses which undertook regular business planning had an average profit margin of 54%. For those that did not, the average was only 35%. Think about why lenders turn people down. 'A plan is also proof - or not - that you fully understand your business and are going into something with your eyes open,' says bank manager Aled Morris. He turned down a recent request for a loan to buy a business from an applicant who had worked as a manager in a shop for two years and now wanted to buy out the owner. 'It wasn't simply that he had no business plan. I wanted evidence that he had considered all the implications of running the business himself. He thought he could just take over and carry on as before, even though he had no experience of some vital aspects of running a business.' Avoid the obvious pitfalls. A common mistake when doing a business plan is building a financial forecast from the top down. People start by saying how much they want to earn, add in the costs, then work out how much they must sell. Instead you should be thinking, 'My research shows that the market is this big. If I can sell to 5% of it, I will make this much, and this is how I will persuade that 5% to buy from me...' Keep it simple. 'A business plan also provides a structured framework to consider even the mundane areas and gauge their impact on your business,' says Margaret Bowler, director of strategic planning at accountants Kidsons Impey. 'However, some businesses become bogged down in vast plans that look at everything in minute detail. These documents end up being ignored because they are too daunting to read - assuming they ever get completed!' Keep it accessible. The key is to make your plan short, clear and realistic so that you or your management team can actually make use of it. You can always put any details in an appendix for reference when needed. As to content, most banks offer good free guides to preparing a business plan; some even offer free software to make it easier. This enables you to consider where the business is now, where you want it to be and how you will get there. The recipe for success is to map this information onto one page. It's easy if you know how. Understand the basics. Take a sheet of A4 paper and divide it into four boxes. In each box, in bullet form, outline the information below: 1. Where you stand now as far as any particular project is concerned in terms of employees, customer profile, media profile, turnover, profit, employees etc; 2. Where you want to be by a specific date; 3. What needs to be done to get you where you want to be, covering every aspect of your business, from hiring people and improving your PR profile to investing in technology or training; 4. The to-do lists based on these strategies: who will do what, by when? Remember: a good plan with short- and long-term goals helps you aim for the bullseye. If you know where it is, you have a chance of hitting it. Otherwise you are just shooting in the dark.


				
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posted:10/31/2007
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