I am a business advisor so I talk to a lot of business owners and it constantly astounds me how many do little or no planning. Without a plan, or at the very least an income and expenditure and a cash flow forecast, it is very difficult to know how well your business is performing let alone where it is headed. Writing a business plan need not be a huge chore, there are plenty of good software programmes around. Good programmes usually include ready made business plans to give you a head start.
1. Many UK companies don’t have a business plan
Not having a business plan is like walking around in the dark without a torch. You may get where you are going but it will take longer and you may tip over several times on route. I recently helped a business move from being loss making to making a good profit. All I had to do was plot forecast income and expenditure for it to became blindly obvious that, unless my client put up his prices, he would continue to fail. The forecast showed that there was no way that he could realistically bring in enough new clients to become profitable. A small price increase against existing client accounts soon sorted most of his problem. If he had an active, simple business plan, which he could have easily put together using software such as Business Plan Pro, he would not have got into difficulty in the first place and would have saved money by not needing my services.
2. Start-up businesses are often too optimistic in their income forecasts
We all tend to be over optimistic. There are plenty of high profile, high value projects that ended up with a price tag many time greater than the initial budget forecast — the building of the Channel Tunnel or the Millenium Dome (now the O2 Area in Greenwich) are just two examples. Getting input from professional business plan writers is one way to deal with this problem. Having an active business plan also means that you can monitor actual performances against your plan and take action if you see that things are going off course.
3. Business owners don’t know what is in their business plans
This can happen when professional business plan writers are brought in. The plan they create is great and secures the funds the business needs, but all too often the business owner manager never really understood what was in their plan. It collects dust on the shelf so is of little ongoing use and their business risks going off track.
4. Start-up companies do a bad job of identifying their target markets
Perhaps one of the most tricky elements of the business plan is identifying your target market. Its not necessary to do lots of research but it is important to think deeply about what you know about the people who will buy your products and services. Who are they? How old are they? How wealthy are they? Where do they live? What to they like and dislike? Where and how to they currently buy similar services and products? If you have worked through these questions for each of your products and uses this data to write the marketing section of your business plan that is a good start. If you also devise a mechanism for monitoring sales against your assumptions you will have good information to inform your marketing strategies and improve you sales forecasts as your business develops.
5. Once the business plan is written it just collects dust somewhere
Too many UK business plans are buried somewhere in the office once they have been written. A business plan is a tool for managing your business performance. It needs to be kept up to date and used as a monitoring tool. Good business planning software includes monitoring tools so it is easy to monitor actual income, expenditure and cash flows against your plans which is essential to avoiding failure.
In the current economic climate it is essential that businesses have plans and that all UK Business Plans are live documents. Your business plan should be an essential tool to help you manage your business through the downturn. If you are not familiar with writing a business plan buy a good software programme such as Business Plan Pro, which includes templates and ready made business plans, or seek help from professional business plan writers.