An effective business plan can often be the difference between a success and failure, and the business plan that was put in place when I began Absolute Digital Media is certain to have had a major impact in the business’ success since. While any business plan will provide you with the direction you need and the motivation to keep following it, it’s only the most effective that will make your business soar. Here, we’re delving a little deeper into how to form the most effective business plan.
What is a business plan?
So what exactly is a business plan? Well, a business plan is essentially a map that displays your business’ overall goals and the way in which you plan on reaching them. This plan will also show the overview of your business, including your targets and financial projections such as costs and revenue. Furthermore, a standard business plan will include an executive summary. Your business plan will also include a financial plan as the final stage in order to accurately predict future cash flow, in order to gain a clear understanding of the viability of the business.
Step 1 – The Basics
The first step to creating an effective business plan is to write down who you are, what the product or service is that you are going to sell, why you are going to sell that product or service and also who your target audience is. Once you have written down all of these factors, you should then include any extra information that you may find important, such as the location in which your business is planning to operate and any employees that you are likely to hire, from shop assistants to potential managers and accountants. Last but not least, you’re going to need to identify your key USP (unique selling point) which should be the real selling point for your business and will be what defines your company from its competitors.
Step 2 – Target Market
Now you have completed the first step you can start considering things that require a bit more in-depth thought, in order to guarantee the success of your business. The target market should be the key point here, and a lot of in-depth market research should be carried out in order to ensure that the business is being targeted towards the right type of people at all times. You will also need to focus on projections into how the market could change over the next 2, 5, 10, 15 and 20 years, and any potential competitors which could enter the landscape and take over a significant proportion of your market share.
Step 3 – The Workforce
The third step to developing an effective business plan is to start looking into the workforce of your company and creating the most efficient hierarchy. You need to decide which roles you will need to hire for and why, as well as why they will be valuable to the company. This will help to develop the most appropriate costings for your business in the short-term and also help you to project the cost of your workforce in the long-run.
Step 4 – The Setup
The fourth step to this business plan is the setup. Within the final stages of the business plan, you will need to further explain what facilities you will own, what will go on at each facility and who will be stationed there. Then you have to explain how you will move your product or service between your facilities and how a customer will purchase the product or service you’re selling.
Step 5 – The Finances
The final step, but equally important is all about the financial plan of the business after all, as this is what your business will run on! You need to start taking note of all the expenses your company will encounter from overheads such as water and electricity to the cost of transportation from A to B. In theory, this final stage takes everything from the four previous stages and turns them into accountable numbers. Once you have finished these steps you can then take a step back and see if your business idea is really going to be worthwhile, how successful your business idea is really going to be and what you might need to change to make it so. A business plan eliminates the chance of wasting vital time, money and resources and reduces the risk of starting up a failing business.
Take note that your business plan is never going to stay the same and it is going to change drastically over time as different variables impact the way your chosen market operates. A business plan will make sure that you’re on track to meet the goals that you have set and will tell you what has to be done in order to try and reach these goals.
Making sure that your business plan is at its best is vital. Make sure that you’re realistic and straight to the point – after all, this is only a brief overview and anyone that is looking at it needs to understand what’s going on without any confusion. Furthermore, being realistic is crucial, as making an inaccurate and unrealistic business plan is likely to see your business fail almost instantly. Good luck!