How to get a solid business plan in place for next year: What are the pitfalls and what should you be thinking about NOW...
You need a business plan for the year ahead and now is the time to get it in place.
Before you start, it’s worth thinking about what a business plan is, why you have one and who it’s for:
- Your business plan should set out your business goals for the year ahead and then outline how these goals will be achieved.
- The reason you have it is to show investors, partner organisations and others that you thoroughly understand the challenges and opportunities for your business and have a strategy to work through them.
- Your business plan isn’t simply a showcase for your investors. It’s the roadmap for everyone who works for your organisation and it needs to be something that gives clear direction to the people who will be part of the team that achieves your goals.
Fact not fiction
One of the biggest pitfalls of business plan writing is to exaggerate the reality and opportunities that your business offers. In an effort to impress investors or the board of directors, some business plans will inflate figures and propose unrealistic goals.
Unrealistic goals create a likelihood of failure, which won’t sit well with those investors when you go through the same process a year later.
Fiction can also creep into business plans because of positive traits, such as enthusiasm and ambition. While these qualities are a feature of all successful businesses, it’s important not to ride this positive spirit to a point where the business plan includes lots of great ideas for how to reach ambitious goals, but which are simply not realistic.
Bunch of fives
You probably have lots of plans for the coming year but try to whittle that down to a handful of key objectives. Somewhere between five and eight is a good number.
This formula keeps the business plan focused while also creating a plan that can realistically be achieved. Within those five or so objectives you can have some sub-objectives that pave the way to action points for teams and their members. In this way, everyone in the business is clear about the part they play in the bigger picture.
Keep it simple
Clarity is essential to an effective business plan. Plans that run to several pages of corporate-speak can be counterproductive, as the most important points get lost.
It’s important that both teams and investors are completely clear about:
- What your goals are
- How they will be achieved
- Who is doing what and why
Lengthy text can look like muddled thinking. Bullet points and short, well-spaced text give clarity, while making the document easier to read and absorb. People tend to skim over extensive passages of text. Keep it short, simple and focused and you will get the attention that you want.
Metrics, metrics, metrics
Did we say metrics? Without metrics, your business plan is just a lot of ideas and intentions. Metrics are measurements of achievement, showing what you’ve achieved up until now alongside measurable intentions for future improvement.
KPIs (Key Performance Indicators) will assess and show your success at reaching the business targets detailed in your business plan. Your KPIs will depend on your business type.
Your metrics should also cover aspects of business such as:
- Direct costs
- Accounts payable
- Sales revenue
- Sales growth
- Customer acquisition
- Net profit
Re-write and revisit
A business plan is a work in progress, just like your business. While it’s all about looking ahead and planning within a clear well thought through structure, it’s also important to be flexible to changing conditions.
Revisit your business plan regularly; don’t just write it and forget it. Keep thinking about the milestones and markers it contains and make sure your team know if they are on track or off track.
Make revisiting your business plan a quarterly task; more if it feels appropriate. Markets can change fast and you need to be able to tweak your plan and move forward to capitalise on new opportunities or ride out unexpected challenges.
Is your heart in it?
Business isn’t all in the head. At the epicentre of the most successful businesses, you will find a real passion to succeed. When your heart is driving your business, using the strong sense, experience and acumen of your head, then you will see the results that you want.
Your business plan really needs to mean something to you and reflect the passion you have for what you do.
Getting to grips with your business plan for the new year can be a tremendously energising process. It can re-invigorate your ambitions and refine your goals into something that has great promise for the months to come. Get a solid business plan in place now and you’ll start 2018 ahead of the competition – first off from the starting line and on target to achievement.