Building a business plan is one of the most enjoyable parts of being a business owner.
It’s a chance to articulate and share your vision with the rest of the company, to set a strategy with the senior management team and to dream big for the future.
Business plans and the financial projections that underpin them are rarely achieved in full but the process of creating one and setting a strategy is vital for the growth of any company and can really engage senior management to help drive the business forward.
Business plans can be used for all sorts of purposes from (externally) raising debt and seeking investment, to (internally) running the business and holding management to account.
In our experience, there is no ‘one size fits all’ approach and we do not advocate the use of an off the shelf package. We find that plans developed in a bespoke manner for your business and designed to fit your specific requirements work best.
The plan might be used to seek investment, increase borrowing or simply to help develop the business direction and strategy for the next few years.
To create an achievable business plan, it is important to involve all of the senior management team and directors to gain a range of views and opinions on the right approach and then to agree the best way to develop the business.
Once everyone’s views and opinions are considered the financial implications of different options should be modelled. This should be an iterative process where the financial outcomes are discussed and debated. This allows the senior management team to consider the likely risk and reward of pursuing different strategies, before agreeing on a particular course of action and setting the overall plan.
A professionally prepared business plan will take your own assumptions, forecasts and strategic vision, it challenges and questions it and then presents your business on a well informed ‘stress-tested’ basis.
At JDC Corporate Finance we often work with our clients to produce a business plan and all of our plans are supported by stress-tested financial forecasts. We will not put our name to something we do not believe in, so this gives you the confidence it can be justified to anyone else who looks at it, either internal or external stakeholders.
Our top 5 tips
• Think about your audience and use plain English – make it readable;
• Seek input and ownership of the plan from across the business;
• Create a clear, punchy executive summary – this is the only bit some people will read;
• Do not oversell – let the facts and the business case speak for itself; and,
• Refer to it often, it will be a useful ongoing performance measure.