When drafting a business plan, you need to be clear about your objectives. Who are you writing the business plan for? What questions does it need to answer? Typically plans are drafted to cover one, three or five year objectives and strategies to achieve them. Writing a plan allows you to identify priorities and the plan itself can be used as a benchmark to measure success. By involving key individuals when drafting the plan, you can often build an engaged and motivated team, working to achieve common objectives. Two key areas of the business plan are the financials and competitive analysis.
Financials
Some entrepreneurs only put together a business plan if they are trying to raise money but not to run their business. Your financial forecast is your dashboard and you should be re-forecasting (not re-budgeting) every quarter. As much as you might think you know instinctively how your business is going, without a proper financial plan, you probably don’t.
When deciding on your business model remember that recurring revenues are usually more valuable than non-recurring, especially if you can sign customers up on longer term contracts. Consider a plan where your customers rent a product or service from you rather than buying it up front. Most companies prefer to spend capital on growing their business rather than on overheads and a regular and growing stream of recurring revenue de-risks your business.
Competitive analysis
I have read hundreds of business plans and usually the poorest section is entitled “Competition”. I was regularly told “well, there isn’t really any competition” which usually means;
- You haven’t done your homework or
- No other companies see any value in doing something similar to your idea or
- There will never be any demand for your product or
- There is latent demand for your product and it will take an enormous investment in marketing to change people’s behaviour and make them buy it
Understanding the competition can help you to estimate the potential market and demand for your products. By comparing and contrasting products and services, you can get a real feel for your own USPs and how you might position them to attract business from the competition or target a slightly different market. Analysing how the competition may react to a new entrant also helps to form the sales and marketing strategy.
Jola is a wholesale supplier of internet connectivity, hosted voice and mobile solutions to the IT and Telecommunications channel. We help our partners at every step from creating a new business to adding new products and services. We provide specialist support to help partners grow new revenue streams from new products into existing markets.
To find out more…
