Before we get started on our One-Page Business Plan, let’s look at the contents of a full Business Plan and explore when should we write one.
Business planning is the process of determining a business’s objectives and strategies over a set period of time – usually between 1 – 3 years. Business planning ensures the business is viable, that it will make a living for the business owner, and to ensure its long term survival.
The Business Plan is the physical output of the Business Planning process.
So, here’s what goes into the typical Business Plan:
Firstly, a Business Plan defines the business concept or idea, including where it fits into a specific market. It includes details such as:
- What the product or service will be;
- Who it will be sold to (customers);
- How it will fit into the market (positioning);
- Where it will be sold (geography, online/offline);
- How it will be supported by the industry (need/demand).
Next, we calculate how much it will cost to start up the business on day 1 (ie to start making sales). Another way of looking at this is to cost out how much it will take to launch the business. Most of these costs will be one off. Regular repeatable costs are termed as expenses (either product related or operational expenses) and will be reviewed in a moment.
Which take us to the next item included in the Business Plan – forecasts. Forecasts are where we make our best, educated guesses regarding how much we will sell over the first 1 to 3 years of our business. Forecasts include:
- Sales forecasts – or how many individual sales we believe we will secure over that period;
- Expense forecasts – how much it will cost us to produce the products/services and make those sales;
- And finally, how much profit we’ll make during that period if those two forecasts are accurate.
A Business Plan also strategizes how a business will achieve its forecasts and future growth. Sales don’t just happen, we have to explain the actions we are going to take. Strategies include:
- What marketing approach the business will take;
- How risks to business success will be managed;
- What future development of product/service offerings we are considering;
- And, finally, what skills are needed to run the business.
Lastly, a business plan will consider how the business will operate on a day-to-day basis:
- The structure (legal, HR)
- The infrastructure (facilities)
- The equipment
- The processes
- The regular operational costs (monthly or annual costs) ie how much it will take to keep the door open and the lights on.
At first glance a Business Plan document can look at a little overwhelming with it’s multiple sections, often using language we’ve never used before. But it’s important to remember that we go through this thought process automatically when we plan our business – all the Plan is doing is summarizing those thoughts and presenting them in a logical order.
Before we move on to looking at our abbreviated or One-Page Business Plan, let’s look at when we should write a full Business Plan.
There are certain situations when you will need to write a full Business Plan, and certain situations when it is highly advisable to write a Business Plan in some form or other.
First, let’s look at the situations when you will almost certainly need to have a full Business Plan:
- You want to raise financing via a bank loan, angel investor, partner, or incubator.
- You want to raise funds via crowd-sourcing, a co-operative, or grant application.
In any of these situations, you are asking a third party (potentially multiple third parties) to help you fund your business. The person or financial institution you are asking will almost always require you to have a full Business Plan. They want to ensure that they are investing in a viable business, that your product or service is fully developed, that you know your market, and have a sales strategy in place to sell to that market. The case you put forward in your Business Plan will determine whether or not they believe enough in your business that they will risk their investing in it.
There are also other situations when you may wish to consider writing a full business plan:
- You are looking into the viability of starting a brand-new business (but do not require financing)
- You are considering buying an existing business. As part of the decision to purchase an existing business you will look at the previous financial statements of that business, so that you can see the business is making money. However, once the business is yours, you may want to consider how to make the business more efficient, diversify a range of products, expand to new areas – or close outlets that are not performing. All of these ideas, and more, can be explored as part of the Business Planning process.
- You are considering buying into a franchise. Often in this situation, the franchise organization itself will provide a standard Business Plan you can take to a bank, or they may offer financing themselves as part of the franchise agreement. This does not, however, prevent you from writing your own plan as well, to double check that the business is being presented in the way that aligns with your specific ideas.
- You are an existing business owner who is looking to expand your products or services, or your geographical area, or the delivery mechanisms for your product – move to online from offline services for example.
- You are inheriting a business from a family member and, again want to ensure that your ideas for the business align to your values and long term plans.
In some of these situations, you may not need a full plan (though it is always a good idea to evaluate your idea in detail).
But using at the very least, a summary plan will help you set yourself up for success in the future.
In the next video, I will introduce you to our One-Page Business Plan template and start walking through the individual sections, step by step.