How long has it been since you wrote, or even read, your business plan? You remember; the document that outlined all the really important things about how your business would operate, your financial projections, your cash flow, your goals, your HR requirements, your procedures, and your products and services.
If your business is just starting up, this is the most important plan you will write, with the marketing plan a close second. If your business is well-established, when was the last time you reviewed the plan to see what you initially wanted to achieve compared to what has eventuated over time? Did you stick to the plan, or did you lose track somewhere along the way?
So what’s a business plan really about?
A business plan formally states a set of business goals, the reasons why the goals are believed attainable, and the plan for reaching those goals. Business plans also typically contain background information about the business. For-profit business plans typically focus on financial goals such as profit. Non-profit and government agency business plans tend to focus on the organisational missions.
Business plans may be internally or externally focused. Externally-focused plans target goals that are important to external stakeholders—particularly financial stakeholders. Internally-focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organisation. An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.
Business plans are decision-making tools. There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience. A business plan should contain whatever information is needed to decide whether or not to pursue a goal. For example, banks tend to be concerned about loan defaults, so a business plan for a bank loan needs to build a convincing case for the company’s ability to repay the loan. Venture capitalists are primarily concerned about initial investment, feasibility and an exit valuation.
Preparing a business plan draws on a wide range of knowledge from many different business disciplines including marketing, finance, human resource management, supply chain management, and operations management.
If your business has evolved in a different way to what you envisaged, take the time to review and amend your current plan, or write a whole new business plan that reflects your business today, rather than when you started out several years ago. Who knows, a new plan may be the re-focus you need to make 2010 your best year yet!
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