Chapter 1
Starting Your Business Plan
In This Chapter
Getting the most out of your plan
Using your plan as a record of the past and a guide to the future
Making your plan function as your company description
Figuring out how to address your different readership
Checking out what the written plan looks like
Most of us go through life thinking ahead. We plan to paint the house, plan to go back to university, plan to take a holiday and plan for retirement – we always have a plan or two in the works. Why do we plan so much? We certainly can’t predict what’s going to happen, so why bother? Certainly, none of us knows the future. But each of us knows that tomorrow will be different from today, and today isn’t the same as yesterday. Planning for those differences is one way to move forward and face things that are unfamiliar and uncertain. Planning is a strategy for survival.
Companies make business plans for many of the same reasons. Planning is a strategy to improve the odds of success in a business world that’s constantly changing. Business plans are not a guarantee, of course. Business planning isn’t a science that offers you right and wrong answers about the future. But business planning is a process that gets you ready for what’s to come. And making a plan increases the likelihood that down the road, your company will be in the right place at the right time.
In this chapter, we explore what planning is all about, how you can use your business plan and why having a plan is so important. We talk about your business plan as a guide to your company’s future, as well as a record of where you’ve been and how you’ve done. Because your plan is a ready-made description of your company, we also talk about the kinds of people who may be interested in seeing your business plan. Then we help you get a handle on who needs to be involved in putting your plan together, depending on how big your company is. Finally, we show you what your business plan should look like on paper.
Getting the Most Out of Your Plan
A plan originally meant only one thing: a flat view of a building, viewed from above. If you’ve ever had a house built or remodelled, you know that this kind of plan is still around (and still expensive). Over the centuries, however, the meaning of the word plan has expanded to include time as well as space. A plan in the modern sense also refers to a view of the future, seen from the present. You make plans for a birthday party next week or a business trip next month.
A
business plan is a particular view of your company’s future, describing the following things:
What your industry will look like.
What markets you’ll compete in.
What competition you’ll be up against.
What products and services you’ll offer.
What value you’ll provide customers.
What long-term advantages you’ll have.
How big and profitable your company will become.
To create a detailed view of the future, you have to make a lot of predictions about what’s going to happen down the road. If your company manufactures crystal balls, of course, you’re in luck. If not, you have to find other ways to make basic business assumptions about the future, which we share with you throughout this book.
In the end, your business plan is only as good as all the assumptions you put into it. To make sure that your assumptions make sense, much of your planning should involve trying to understand your surroundings today – what’s going on right now in your own industry and marketplace. By making these assumptions, you can better predict your business and its future. Will your predictions actually come true? Only time will tell. Fortunately, the planning process makes you better prepared for whatever lies ahead.
Looking to the future
A business plan provides a view of the future. Whether your company is large or small, whether you’re just starting a business or are part of a seasoned company, you still need some sort of planning process to point you in the right direction and guide you along the way. For example:
A brand-new company makes a business plan to get its bearings and often uses the plan to get funding.
An up-and-running company uses a plan to be better prepared.
A large company needs a plan so that everybody sees the same view ahead.
A small company makes a plan if it wants to make sure that it survives those crucial first two years.
In fact, a small company needs a business plan most of all. If you own or manage a small business, you already know that you’re the jack-or-jill-of-all-trades. You hardly have enough time to get your daily business tasks done, much less plan for next we...
