Maybe you’re thinking you don’t need a business plan because a) you already know what you want to be doing by this time next year, and b) a loan or investor isn’t something you think your business will require in the near future. In a perfect world, you could be right.
But then again, it’s seldom that things go how we think they should from the onset of a business starting point – which brings us to the 2 main reasons why you really do need a business plan in place. As you will see they both do require a proper accounting of your finances, and the agility to change horses in the middle of the stream.
1. Getting What You Want Means Knowing What You Need
Think about it. Are your goals today the same as they were last year, or five years ago? Probably not – and if they are, you might be a bit stuck in a rut. And of course, when you’re in business, a dead end is the last place you want to be.
Things change, and if you look at the companies with impressive longevity, they’ve undergone some major transformations.
Let’s take a look at HP, for example, which was founded in a garage (now the historic landmark dubbed the birthplace of Silicon Valley) by Bill Hewlett and Dave Packard. Once schoolmates from Stanford University, they continued to master the evolving world of technology until their friendship became a genius collaboration that would become legendary.
In 1938, with a meagre working capital of $538 cash and a used Sears Craftsman drill press, Bill and Dave develop an audio oscillator. The following year they chose the name of their new company Hewlett-Packard with the toss of a coin. Yes, the corporation has seen good times as well as bad. Had HP not been willing to shift with the winds of change, there wouldn’t be an HP computer, or the bright future ahead.
2. There’s No Shame In Using Other People’s Money
A phrase made popular by the 1991 Danny DeVito movie, using ‘other people’s money’ has gone from tainted to trending. Now, even those companies (as in the film) with lots of cash on the books are adding value by bringing in investors and bankers. The world of finance is going through quite a surprising metamorphosis – from once stodgy financiers with a death grip on your collateral, to newly-engaged partners willing to impart their financial acumen for a chance to do business with talented entrepreneurs.
Of course banks are happy to help; they know a good business plan is going to be required, and many have DIY guides right on their websites. This Lloyds sample provides easy text with illustrations. Santander Bank gives you a very specific business guide, broken down into industry sectors. For instance, if your industry is accounting there is a cost calculator as well as specific descriptions of each factor to be included in an accountancy business plan. One frequently cited business plan outline is also recommended by gov.uk.
Your Business Plan – Start At The Beginning
Going through the process of putting together your business plan means asking (and answering) the hard questions. It will be an overview of your objectives, and a strategy for achieving them, as well as forecasts for your sales, marketing and financial pictures. And, you will want to update your figures at least a couple of times each year.
By setting up your goals, it will be easier to spot potential problems and ‘head them off at the pass’ before anything turns devastating. Measuring the progress you make, with a clear business idea in mind, can also be a litmus test for how well your concept is constructed, or not.
Because you will need to convince other people of your company’s worthiness throughout its history – both clients as well as collaborators – your best and most confident results will come from truly knowing where you stand.