Getting finance for your business with an effective business plan

A business plan is an important tool for any company, particularly if you are looking for finance to start or expand your business. It serves as a valuable tool, giving your business a sense of direction – a strategy by which you can ensure that your company is moving in the desired direction. A good business plan will help your company to focus on its ultimate goals and word towards them. Research shows that it does work, and companies that develop effective business plans achieve a considerably higher profit than those that don’t.

Although a business plan won’t provide the answer to every problem or pitfall that your company might face, it is an important initial step for your business. Firstly, it will give your business a sense of direction. It will also show others (not least, your bank manager…) that you have really thought about your objectives and have developed a well thought out strategy. Your plan will enable you to map out your main objectives in a solid format and then work towards achieving them. It will also serve as a tool against which you can measure your company’s progress, enabling you to highlight any problem areas and quickly take action to get back on track.

Many people think that a business plan us something that it developed when a business is starting out, and then forgotten about once things get off the ground. However, it is important to remember that business plans are on-going – they should be used continuously as a tool with which to monitor and evaluate the way your company is run as well as when it comes to securing finance to expand you business. Without a constantly updated plan, you are in danger of losing sight of your original objectives and losing both control and credibility.

Your business plan should address key points, including the following:

• Why your business exists
• The future and direction of your company: where it is going
• How you plan to get your business to its destination
• What all of this will cost

In other words, you need to highlight the purpose, objectives, strategy, and budget.

You should start with the ‘purpose’ of your business: Why do you want to start this particular business, other than to make money? Who will your business serve? What specific expertise, knowledge or experience do you have which makes you want to start this particular type of business?

The next stage, your ‘objectives’, should focus on different areas of your business. For example, you need to think about your company’s financial objectives (how much you plan to turnover within a given time frame), as well as your strategic objectives (what your aims are within a given period of time). Depending on your business, you should develop objectives for different areas, such as financial, strategic, and marketing. You should also be able to provide a summary of your overall objectives.

Your ‘strategy’ should clearly point out where you want to go and how you plan to get there. You should carry out as much market research as possible in order to give a clear, realistic picture of your strategy. Your business plan should illustrate that you have carried out extensive research and that your projections are not simply based on wishful thinking! You need to be able to answer questions such as:

• What makes your product unique?
• Why will people want to buy from you?
• What type of people will you be catering for?
• Supply and demand: how will you supply what the customers want?

The final part of your business plan that must be addressed is your ‘budget’. To avoid your forecast becoming more like speculation, it is better to stick to a twelve-month cash-flow, and a two-year profit projection. You should carry out thorough research into costs that are included within your budget in order to give as accurate a costing as possible.

There are no set rules about how to prepare your business plan; the best thing to do is to keep it concise and jargon-free: the simpler, the better. Providing it includes all of the keys points, it is totally unnecessary to try and make it sounds technical and more complicated than it really is – this will only confuse others, and maybe even yourself. Before you begin to write your business plan, you need to carry out extensive market and budgetary research. You can then draft your business plan, and once this is done you can begin to act upon it.

The important thing to remember is that you have to be clear about your goals and objectives before you can try and show others what you are trying to achieve. By drawing up a simple, clear, and thoroughly researched business plan, you can clarify your objectives in your own mind as well as have a strategy upon which to base the way your company is run.