What is a business plan for?

This is a question I have been asked regularly, I have mentioned in previous articles some of the reasons for a business plan and there are other reasons for creating them. So why is it so important to have a business plan?

Finance:

To start up a business you require some start up capital. Some businesses require more capital, some less. For some business you only need to have some insurance and a van (if you’re a tradesman for example.). Your van is written by the finance company and your insurance is quite cheap so this would constitute less start up capital.
However, some businesses may require heavy investment for equipment and to lease a building which would include all of the legal work involved and then some capital for cash flow.
Some businesses also require loans from lenders such as the bank. This is where the business plan comes in! You stand a much better chance and receiving a loan with a good business plan. Why do I say a good business plan? Because if you download a business plan template, which is really more of a questionnaire, I would say that you stand a significantly reduced chance of receiving a loan than if you had no plan at all.
These downloaded templates just scream ‘I don’t know what I am doing!’. Would you lend your money to that person?
To set out what you ultimately want from your business:
This would be your exit strategy, do you want to run the business, dissolve it and retire? Do you want to run the business and pass it down to your children? Do you want to build the business and sell it?
What ever your exit strategy is you will require short term, mid term and long term goals to get you there efficiently.

Short term goals:

The short term can be up to around 1 year.
  • If you are creating your business plan before the business is trading you would include the start up procedure in this section for example, do you need a loan, how much where are you going to get it?
  • Are you incorporating a limited company, why? If not, why not?
  • Do you require a premises, where, how much will it cost?
  • Do you need staff? Insurance?
  • When do you plan on taking time away from the business?
There are many more points in this section and it is important that you think of them all because this is the foundation of the business.

Mid term:

The mid term can be around 1 – 3 years.
  • This might include are you now moving into bigger premises, smaller premises, why? (Remember the business plan should mould with the business, it is not set in stone)
  • To what level, if any, are you looking to increase the size of the business by this time?
  • Will you require more/ different equipment to cope with the size of your business now?
  • Are you branching out yet or at all?
Again, many more points that can go into this section.

Long term:

This can be 3 – 5 years.
  • Is this the time for the exit strategy?
  • Have you got continuing short and mid term goals to achieve?
  • By this time you would have a few year trading so would you plan to look back over the trading history to identify efficiency and look to save money in less efficient areas?
How do we create your business plan:
If you instruct someone to create a business plan it should be with you and not for you. This means you should be involved throughout. At Kidwells Business, keeping you involved is exactly what we do. We have proven to help people achieve their goals which include gaining finance from lenders when they couldn’t before and gaining leases on buildings.
Call us at Kidwells Business to discuss all of the targets that you may need to consider to help make your business a success.

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