If you are taking the first steps towards setting up your business, it is essential for you to be well prepared and put together a detailed business plan. The importance of a business plan cannot be understated, as it can help you to develop long term goals and objectives to get your business off the ground. There are numerous steps you should take when writing a business plan, such as identifying your target market, and competitors and creating a cash flow forecast. Creating a structured plan can provide stability and help track the progress of your small business as it grows.
WHY SHOULD YOU HAVE A BUSINESS PLAN?
ANALYSING THE MARKET
Depending on the products or services that you are offering, analysing the market you are entering is an essential step when creating a business plan. One main purpose of a business plan is to identify your competitors and their marketing strategies. This is important so that you can see how a successful business has been set up and what methods they have used to gain a foothold in the market. Applying elements of their business model to you can help you to put the building blocks in place for long term success.
CASH FLOW FORECAST
One of the main features of a successful business plan is a cash flow forecast. When starting your business, planning where funds are coming in and going out is essential, as you can more effectively budget for the future. You will want to track your cash flow closely in the first few months to monitor whether things are going to plan in terms of incomings and outgoings and measure if you are on course to hit targets.
ATTRACTING EMPLOYEES AND INVESTORS
In the early stages of your business, it is likely you will be recruiting new employees or hiring contractors to work for you, depending on the field you operate in. Business plans can help to create confidence amongst potential employees and contractors, as they can see the clear path that you have set out for the business. This can help motivate them to hit these targets, particularly if there are incentives for them to do so. Not only this, but you could attract potential angel investors or venture capitalists by laying out to them your business model and long-term plan to grow.
PLANNING FOR THE FUTURE
Not only is a business plan important in creating a cash flow forecast, but it also plays a major role in planning for all aspects of your business’s future. For example, you can set a target of how many employees you hope to take on in your first year or lay out your marketing plan to help your product reaches its intended audience. Having targets to aim for means you can have the next steps planned out, regardless of whether you succeed or fail. You can feel well prepared for any possibility and have a backup plan drawn up should things go wrong.