Please note: the sound on this recording is a little low, you may wish to listen through headphones.
Let’s start with a short introduction into the process of business planning and where a Business Plan fits into that process.
From there we’ll also be able to see how the development of our business idea is integral to both activities.
Business planning is a process which develops and decides on a business’s objectives or goals, the strategies it will adopt, and the actions it will take to reach those goals.
The Business Plan is the written report within which those objectives, strategies, and actions are documented.
The business planning process is composed of a number of activities that seek to:
- Define the business concept or idea, including:
- Overall goals or objectives
- What product or service will be sold
- Who it will be sold to (customers)
- How it will fit into the market (positioning)
- Where it will sold (geography, online/offline)
- How the industry will support it (demand)
- Calculate how much it will cost to start up the business on day 1
- Forecast how much will be sold and how much money the business will make over a set period of time:
- Sales forecasts
- Income and expenses
- Strategize how a business will achieve its forecasts, goals, and future growth:
- What marketing approach the business will take
- How risks to business success will be managed
- Considers future development of product/service offerings
- How many staff it will require and what skills they will need
- Plan how the business will operate on a day-to-day basis:
- The structure (legal, HR)
- The infrastructure (facilities)
- The equipment
- The processes
- The costs
While the Business Plan draws the results of the business planning activities together in a single document.
While most activities related to business planning tend to be natural to most new business owners, as they think about and develop their idea, the creation of the Business Plan itself is entirely an optional activity.
There are times however, when you will need a business plan.
If you are applying for loans or grants to support your business, you are likely to be asked for a copy of a Business Plan by your bank of financial provider. If you are looking for formal partnerships or investments, you are also like to be asked to provide a Business Plan. You will be asked to provide a Plan so that your financial provider or investor can clearly see what expectations you have for your business and how you intend to meet those expectations.
There are also situations when having a Business Plan is advisable: purchasing or inheriting a business or franchise for example. Creating a Business Plan in these situations will help you run different scenarios in terms of future expansion or specializations, or how changing your marketing approach may increase or decrease sales, or how purchasing new equipment will effect your bottom line.
Finally, even if you aren’t looking for external support or adapting a business you inherit, bringing the results of your business planning activities together in one place may be something you will find useful to have done when you look back on your business in the future. It’s an easy way to remember the details of your business, why you started it in the first place, what your goals are, etc.
In the next video we’ll take a high level look at the very first of the puzzle pieces that make up the business planning process, the Business Vision.