Do I need a business plan?

The importance of business planning cannot be overlooked even if your business is not seeking finance.

It is true that a business plan is a written proposal often used when raising finance for a business, but it also serves other vital functions.

Firstly, it is very useful to write one even if for nobody else’s benefit but your own. A business plan will help you make sense of a number of key factors.

Think: Who am I and what are my skills and background? What is my product or service? Where is my target market and how will I reach them? Who is my competition? What are my strengths, weaknesses, opportunities and threats?

A business plan must also include a breakdown of the financials. How much money do I need to survive (bills, food, mortgage)? How much are the running costs of this business (rent, stock, utilities, marketing)? What is my monthly income and expenditure likely to be?

Secondly, a good business plan will set you goals and milestones. If you do not set targets, how do you measure what you have achieved?

We often use the analogy of the first man on the moon. In 1963 JFK made a historic speech in which he said: “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.” After much scientific research the first man landed on the moon in July 1969.

A plan will help you to put your ambitions for the business down on paper so that you can have a clear vision. Then you can monitor your progress.

For example, by the end of year one you might want a turnover of £20k or to have employed an extra member of staff.

Finally, there may well come a time when your business is looking for financial investment and this is the document which will give any prospective investor confidence in your business.

All the questions you had to answer to yourself you must now answer for a potential investor, and if this plan has been written properly and followed from the outset then justifying yourself to an investor will be much easier.

Paul Heyworth, director of business support, Business Venture Group.