5 Tips for Developing an Effective Business Plan

Unfortunately, a business plan has become a means to an end - it rarely achieves what it could or should deliver. There may be valid reasons why a template approach is used. Examples may include when applying for a grant, loan or other tender and the third party requires a business plan simply to follow a process or tick the box. However, a business plan when done correctly should become the bible for the business and be referred to on a daily basis. A business plan should be a road map that provides guidance for the business to follow when implementing business strategy. Here are five tips for developing a business plan to lead your company to success.

1. Industry Research

Google is a great resource but will not provide an efficient or complete source of information required to complete your business plan. Ensure the research you are using is current and closely related to the key drivers of your industry.  Many professional services firms will have access to large research databases that are often cost prohibitive to individual businesses.  

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2. Flexible Business Plan

The business plan needs to evolve and change as your business changes, and with the improvement and availability of  information and data. As such, your business plan must be built in a flexible manner that allows for regular reviews and updates.  

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3. Clearly Define Your Value Proposition

Nothing in your business plan is more critical than clearly defining the value proposition of your product or service. If you cannot clearly articulate your competitive advantages and what sets you apart from your competitors, then alarm bells should be ringing.  

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4. Build A Detailed Financial Model

Your financial model (your budget) should be built using the key drivers of the business. As  your assumptions become more refined, they can then be updated with minimal effort on a regular basis. Ensure you financial model is internally consistent with the remainder of your business plan. You need to specifically ensure it links to the marketing plan and pricing list. If your business has an established reporting process, the budget of the business should be built to match this reporting. For example, if the operations, financial, marketing and sales departments present against pre-determined indicators on a monthly basis, ensure these indicators are easily identifiable through the budget and forecasts.  

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5. Do Not Use A Business Plan Template

A business plan should be fully customised to your business. Your business plan should reflect the culture, look and feel of your business. Using a template will provide you with a white label business plan that serves little purpose and achieves even less. You will get out of  your business plan what you put into your business plan, so ensure you are investing the appropriate resources into this critical strategic document. If you build a business plan that your team is proud of, then it will be embraced by the team and used effectively to ensure your business follows the roadmap that you have outlined.  Ultimately, it will save you from costly diversions away from your stated objectives and provide a daily benchmark to assess your company's success.

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