A business development plan, or ‘business plan’, is evidence of an underlying plan or purpose to your business. Almost every business will have this as a general idea, however the act of committing the business plan to writing will give your plan a defined form, structure, and encourage consideration of connections that may have otherwise been overlooked.
Where there are multiple owners/managers, this forces everyone to ‘get on the same page’. This is a valuable process in and of itself to help identify and defuse potential conflicts before they arise.
Your business plan should reflect the nature of the business and provide detail about its important parts. This means that there should be no two business plans that are exactly the same.
At BDO, when we are preparing a business plan, we believe the audience of the business plan to be a fundamental consideration. If you are writing one just for yourself to help create a map to the future, this does not need to be as formal as a business plan that you intend to provide to say, a bank to help in securing an additional loan, or a government agency from which you may be seeking grant funding. This is because you know what the business ‘does’ but the bank or government agency may not.
Regardless of the audience, a comprehensive business plan will need to cover, at the minimum:
- The core business, being an overview of what does it do, what are its goals, and what is its history?
- Structure and resources, including how is the business owned and what resources does it have and/or need?
- Operational matters, like what are its products/services, what are the inputs required, how do inputs get converted into the required output, what are the risks involved and how are they mitigated?
- Market analysis, incorporating who are your customers, who are your competitors, and what is your competitive advantage? Where are your opportunities and threats?
- Finances, including projections for the future of the business, sources of funding, key targets and ratios.
- Sustainability, as in considering what the impacts of your business are on society and the environment? If negative, how are you addressing this?
The level of depth to go into will depend upon your purpose and audience for the business plan. If it is a business plan entirely for you, you may be able to ‘skim’ details about the core business compared to if you were trying to sell the business concept to someone who is not familiar with it (such as a bank that you are seeking a loan from).
An area we would strongly encourage be fully fleshed out irrespective of purpose and audience is your financial projections. These projections should not only be used as a method to confirm your business has the means to continue as a going concern, but that it also provides you enough of a return to make your efforts worthwhile.
If you are not comfortable in developing the financial projections yourself, seek professional assistance. At BDO we can assist by preparing a ‘three-way forecast’. What a three-way forecast does is combine all three key financial reports into one consolidated forecast. It links your Profit and Loss, Balance Sheet and Cash Flow together, so you can forecast your future financial position.
This three-way approach provides accounting integrity to your cash flow numbers, as they are being driven by the data in your Balance Sheet and Profit and Loss, and allows you to monitor better your financial health. That adds real value when it comes to approaching banks and investors for financial support in helping to explain the future prospects of your business model.
If you need help with your business plan, or just want an external perspective with the benefit of years of professional experience, get in touch with our professional team of business advisers at BDO. We can develop in whole, or in part, your business plan so that you can focus on what you do best. You can also find out more about our business planning and growth services on the website.