Writing a business plan |
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OK so you want to write a plan. How do we go about it. |
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Write down what you do / make. |
How much money do we make in each area? |
Lets talk about marketing and the four P's (Product, price, promotion, place). Firstly who do we sell to? Retail?, small business?, large corporate?, local government?, export markets? Why do they buy from us? How is their business doing? Are they who we want to sell to? If not, who are? Many firms think selling to big companies must be the best approach, but then go broke because they haven't planned for the long lead times and very long credit terms. What is our competition doing and how do we compare? Where are we in the market in relation to these clients. High value goods may sell to large corporates, but not small companies. Will our future client set want to buy our future services? How can you plan for the transition between the two? What is our route to market based upon the customers we sell to? If we are moving up or down market should our routes change? Which areas are best for us to be trading in? |
Complete a SWOT analysis of your company in its marketplace and potential marketplaces. These are your strengths, weaknesses opportunities and threats. This might look like : Strengths - diverse base of customers, managers skill set Weaknesses - lack of finance, single purchases from customers not much reselling. Managers lack of skills. Opportunities - some enquiries from large organisations, publicity coup. Threats - dependency on some key managers or directors if they left. For each of these, use them as an opportunity to plan how to best exploit / address these advantages / challenges. |
Prepare a spread-sheeted cash flow forecast, including forecasted sales, cost of sales, purchases, recruitment, investment in training and IT. Think about the variable that can affect your business. You can work on these variables in isolation at a later date. |
This can take some time but the more we work on making it as close to reality as possible, the more powerful tool. More time spent planning means less time fighting fires later. Assumptions should be defined but variable, so that firstly we are aware that these assumptions exist and secondly we can undertake sensitivity analysis when for example we don't reach our forecast of 35% conversion of enquiry to sales. Use historic data to generate our assumptions. If we don't have the data, use other companies knowledge or a consultant. |
This format allows us to build our plan on reality, not fantasy. It lets us know when we can buy that new office, take on more staff or install the new network. It will let us know of our likely cash requirements at the bank and how they could tailor our facility. |
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