Serial entrepreneur and author Creel Price advocates business plans as a way for business owners to give structure to their thinking.
“Certainly in the financial modelling side, being forced to do a plan means that you start to do the maths and the effort that you are forced to put in up front forces you to be a lot clearer,” he says.
“If you are going for investors it is crucial and it helps you communicate with staff,” Price says. He says a business plan helps staff feel involved in your business and they can let you know whether your plan is achievable.
“Particularly the typical entrepreneur tends to just assume a lot of stuff, they can envisage things without realising how hard it is to make it happen,” Price says.
Kevin Dwyer, managing director at business consultancy the Change Factory, says without a business plan you are “flying blind”. “If you are a one man band maybe you don’t need a business plan but if you become more than one person you need a plan,” Dwyer says.
“It makes you think what your business is about. Quite a lot of small businesses don’t know what their business is about, who their customers are and how they can make more money out of those customers.”
Dwyer says business plans are not just for startups and are even more important for established businesses. “When you are a startup you are usually looking at a nice neat picture of your market, but the world is never like that and it is only once you start going along that you understand the issues you never thought of as a startup,” he says.
How to write a business plan
Now you’re convinced you need a business plan, how do you actually write a useful plan?
There are a few guidelines to keep in mind and the first is that it should be short and sweet. Price recommends keeping your business plan to the length of “a double sided one pager” but says “to get to that page there’s a huge amount of work that goes in”.
“You don’t want a door stop, you want a living and breathing document that people use,” he says. Dwyer recommends starting with your financials if you have been in business for a while.
“Look at your profit over the last few years and sales,” he says. “Get an idea of where you are at, where your major customers are from, any trends in the type of work you have been doing over the last few years.”
Dwyer then advocates spending a day with your staff “doing a bit of blue sky thinking”.
This could involve talking about new products and changing the structure of your business. Most importantly, Dwyer says you shouldn’t think about all the reasons why you can’t do something.
Save that for the next day when you do a SWOT analysis of the strengths, weaknesses, opportunities and threats for each idea.
“Then come back in three months’ time and think about what money is required, what resources are required and put together a budget and plan for the next 12 months,” Dwyer says.
This is your business plan and if you are looking at expanding your business you might want to look at other performance indicators like your ability to recruit the right people.
“You now have something to focus on, you know what success looks like, you know what to focus on along the way,” Dwyer says. “You can still change your mind but you know what the alternatives are.”
What to do with your business plan
The business landscape changes so quickly that you can’t afford to write a plan and then put it aside and forget about it.
For Nic Blair, founder and co-owner of Search Factory, being prepared to make changes to his business plan has been key to his success.
“You need [your business plan] to have some larger goals that send you in the right direction but at the same time you need to be flexible,” he says. "You don’t want to be too rigid by shutting yourself off from other opportunities.”
Lisa McGuigan, the entrepreneur behind Lisa McGuigan Wines, also says there’s no point having a business plan which just sits on the shelf.
“I use a business plan as a blueprint and I add to it as I need to or chop off as I need to,” she says.
“There are things that change in the market; for example, the licensing laws affect the wine industry, so you have to adapt it and be flexible. A lot of it is about being intuitive to the market and knowing what people want next and you can’t predict that.”
In order to keep your business plan relevant, Price recommends reviewing it every 90 days and using your plan to set priorities. “In every month or quarter you should have three to eight priorities and you can’t include a new priority unless you drop something else off,” he says.
Dwyer also recommends updating your business plan on a regular basis and building on each plan.
“Each time each business plan should be better than the last one,” he says.