What is the importance of a business plan

Whether you’re a new emerging business or you’ve been in the game for a minute, it’s imperative that you have a business plan not just when you’re starting out and trying to secure funding for instance but also when you’re a long-standing business. Both need a direction and that’s where a business plan comes in.

Why do you need a business plan?

A business plan is a document setting out a business’s objectives, goals and strategies. If that doesn’t tell you why you need a business plan, I’m not sure what would. But essentially you need a business plan so you don’t go into a new business idea without any forward planning and strategy in place.

With something like starting your own business, you will want to have a plan to work to in order to grow the business. A simple business plan sets out objectives such as setting goals for either yourself and your team within a set time frame, whether that be a certain amount of sales or the number of followers you have on social media.

These initial objectives and goals will help you to establish a plan or roadmap for your business. This means you won’t be running around aimlessly trying to make your business idea work.

A business plan allows you to set goals, deadlines and specific action points to develop your business from an idea into a tangible, and profitable business.

Will a business plan differ for new businesses?

If you’re a new business you’ll be starting from scratch with your business plans and if you’ve never written one before you may find yourself missing out important parts and only realising when your come across the issue six months down the line.

This is why is great to write down your business objectives and then break them down further into smaller objectives. With a new business, you need to start at the beginning. Look at your idea, and determine what kind of business model will work.

For example, if you’re planning on starting a dropshipping business, the minimum you need is an ecommerce shop, a payment gateway and a dropshipping supplier relationship in order to fulfil your orders.

These things alone, however, won’t be enough to help you start your business. You’ll also need to plan for the creation of your social media channels, consistent branding across all assets and a plan on how to promote your business. To do all this you’re going to need some start-up cash but there are alternative ways to start a business with no money too. 

These are only a few things you need to include in your business plan but if you want to also have a brick and mortar shop, you’ll also need to take into account the costs of setting up and running that as well as any POS (Point of Sale) systems, signage etc.

So yes, a business plan for a start-up does differ compared to a business plan for an already established business but the purpose of the business plan remains the same for both.

What needs to be included in a business plan?

While your business plan is there to help you set measurable and actionable objectives the document itself should be short and concise. This is firstly, because you want your business plan to be read and secondly, you will need to revisit and revise your business plan over time and a long document will take a large amount of time to revise.

Keep in mind that you know your business best so don’t try to overcomplicate your business plan, but keep it simple and most importantly understandable to anyone who might read it, be that a funding group, a bank or yourself.

1. Executive summary

This is an overview of your business and your plans and should be the very first thing you read. Remember to keep it short and concise, you can go into more detail later on.

2. Opportunity

In this section you’re going to want to answer questions such as “What are you selling and what problem does your product solve? Who is your target market? Who is your competition?”. This is the section where you can go into more depth about your business idea.

3. Execution

Here is where you’ll draft out your plans for executing your business plan. This includes everything from marketing and sales to operation and objectives such as the number of sales or profit amount etc.

4. Company and management summary

Once you’ve set out what your business is and how you’re going to take your idea to market, you’ll need to consider if your business will need any employees or if you’re going to start up with just yourself. Either way you need to include an overview of your legal structure, location and history (if you’re already up and running).

5. Financial plan

This section can be a bit daunting but it’s important to include a financial forecast. This will help you and inventors (if you’re looking for any) understand the financial objectives for the business over the next few years. You should keep this at a high-level view but include a breakdown that fits your business, for example, split your forecast into product groups.

6. Appendix

Lastly, you need to include an appendix. This is a section where you can also include product images or additional information that didn’t fit into the earlier sections.

 

If you’d like to learn more about setting up your own online shop, you can speak to our ecommerce experts on 0333 004 0333 or request a callback here.

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