The benefits of creating a clear business plan and sticking to it
[br]As mentioned in our previous blog post How To Write a Business Plan, a good business plan will help you meet the financial goals you desire. A clear plan will include comprehensive market research, an executive summary, explanations around the industry you’re in and where you’d like to position your product or service.
While a business plan itself is not a legal document, it will have a major impact on the legal issues relating to your business. Potential investors will need to know what type of company they’ll be investing in – for example, whether you’ve chosen to be a company limited by shares or guarantors – and know the direction of your business. Here, we break down the benefits to creating a business plan and what you should have in mind before you begin.
There are three main benefits to creating a business plan
Help fund your company
According to Entrepreneur Media’s book titled Write Your Business Plan, a business plan helps convince potential funding sources that your company idea is well thought out. Your financial goals will help investors see your potential and give them insight into your key forecasts.
Give your business clear direction
Your business plan should explain the objectives of your company and how you wish to achieve these objectives, over a set course of time. Typically, a business plan should cover the next one to three years. If you’re trading as a private limited company, your business will then be considered a separate legal entity. Therefore, you’ll have to think of it as separate to your personal life.[br]
Set a benchmark for the performance of your business
If you’ve created clear goals, then you’ll have figures and aims to work towards. Goals provide a clear way to measure your progress as a company. If your business plan contains the key targets you’d like your company to reach, then you give yourself some accountability. Who doesn’t enjoy ticking things off a checklist? With goals highlighted in your business plan, you’ll have your targets in writing.
Key things to think about before starting your business plan
Your executive summary
An executive summary is simply an introduction to your company. Think about what your company does or solves for your customers, what it represents and where it sits in the market. Investors often only ask for your executive summary when they’re evaluating whether to invest in the business, so it’s important you’re completely clear in your direction and brand.
Your target audience
[br]Who are you wanting to sell your product or service to? This should be one of the first questions any entrepreneur should ask themselves before trading. Identifying your target market helps develop key marketing communication strategies. You’ll need to research what the common characteristics your customers or clients share, in order to be able to curate specific messages and organic content that serves them. You want your website copy, your marketing and promotional material to speak to them.[br]
Test your business idea
[br]Market research, market research, market research. Have you conducted surveys to see whether there’s a market for your business idea? It can be helpful to get a focus group on board to help hone your idea; get a small group of people together, get them to use your product or service and see what they think.[br]
Know your source of funding
[br]Whether your business plan is what you hope to use to attract investors, you’re selling shares or self-funding, you’ll need to know where your business capital is coming from. Crowdfunding is also a viable option for a small business, so it could be worth considering this avenue.[br]
Can The Formations Company provide me with a business plan template?
[br]Yes! With our free Business Start Up Toolkit, we’ll provide you access to PlanHQ. This is a tool to help you create a business plan, worth £180 a year. The tool is cloud-based, meaning you can work on your plan from any of your devices. Broken up into five sections, the tool allows you to explain your business model and strategy.
Ready to form your company? Choose your incorporation plan and begin your business journey.