Coming up with a business idea that you genuinely believe in is one of the most exciting moments in the entrepreneurial journey. But it is only the beginning.
To bring that idea into reality, and make it a profitable and sustainable venture that allows you to fulfil your ambitions, requires a carefully laid out business plan.
Writing a business plan can be a daunting prospect but it need not be a difficult process. What's more, both the final product and the process itself will be of great benefit to you, helping to define your long-term objectives, providing a blueprint for running the business and a series of benchmarks to check your progress against.
Ultimately, writing your business plan forces you to look at your `ground-breaking' idea in the cold light of day. It requires you to review all the key elements of a successful business at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan.
While the detail of any one business plan will be unique, the key aspects that need to be covered are more or less common. Below we set out some key pointers for developing your own business plan. These can be used in conjunction with the Business Plan Tool on the HSBC Knowledge Centre.
Your business plan should be seen a process not just a document to be completed. It is important that you set out clear responsibilities and schedules throughout the process, are clear about the ultimate objectives and commit to reviewing your plan as regularly as possible.
Good business planning is about turning your strategic goals into financially viable business activities. It will start with the big picture and then work towards the details.
The key elements of a business strategy consider the internal and external factors. You need to assess the market and sector your business is entering, taking into account potential customers and competitors. You should consider the strengths and weaknesses of your business and clearly state what your business does and where you want to take it.
The key to this section is positioning your business to respond to the needs of potential customers. The marketing plan should analyse your intended customer base, forecast demand for your goods and services, and understand how markets usually develop and which phase your particular sector is in.
Set out clearly what resources your business will need and how you intend to use them. Detail is important as your operational plan will form the basis of the costs that feed into your financial forecasts. It should cover aspects such as getting the right people in place, getting your structure right and looking at the premises and other infrastructure that you will need.
You need to understand your business in financial terms and make use of essential management tools such as profit and loss and cashflow forecasts. Using software allows you to automatically feed your projected revenues and costs into the relevant fields on your key financial statements for the forecast period. This allows you to look at the possible financial effects of different market scenarios. You may well require help to make sure your financial forecasting is accurate.
Business planning is about deciding how to use your available resources to maximise profits. The information from your financial forecasts gives you a regular basis on which to make these decisions. You should, though, be wary of basing decisions purely on your figures. Your financial statements are only as good as the business model that created them.
Budgets translate your financial forecasts into operational action plans. They set the revenue and cost targets that you will have to meet in order to achieve your projected profit margins and returns. It is important that your budgets are sufficiently detailed and that you review your progress on a monthly basis. Of course, things do not always go to plan so you need to be prepared to review your budgets and the planning behind them.
Use our interactive tool to help build your own business plan:
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