You may think you don’t need a business plan, but I recommend you do one if you are serious about building your business. The fact is that businesses that plan, do better. Business plans allow you to spot both threats and opportunities, to understand your company’s pressure points, and to make your business more resilient.
What exactly is a business plan?
Firstly, you should understand that there are different reasons to have a business plan, and therefore different types of plan. You may be developing a plan for your own internal use – either just for yourself or for your senior team – which will clarify your direction and help you with goal setting. This plan may look more at management of the business and be a tool to track, measure, and evaluate progress. Or it may be a planning tool, a strategic document aimed at taking all your employees with you through periods of change or growth.
If your purpose is communication, your focus could be more on developing partnerships or raising funding and investment. You might be looking to sell the concept of your business as part of strategic alliances with other firms or potential clients. Where you are creating a plan to support a business loan application, this will look quite different because the bank will have specific areas of focus and want answers to particular questions.
How long does it take to write a business plan?
I don’t believe that business planning should be a long and arduous task. When we work with clients to do this, we book just two two-hour sessions with them. We use the first two hours to get a finished draft in place. We then leave it for a week or so and come back for a second two-hour session to polish, improve, and finalise. Because we’re expert in doing the financial aspect, most of this time is focussed on the real detail rather than boring calculations!
What should be included in a business plan?
There are two parts to a business plan: the narrative and the financial projections.
People tend to think that a business plan is primarily about the numbers. So they work away on their projections and then feel that’s more or less it. But this is only a small (if important) element of your plan.
The narrative part of your plan should form the bulk of the content. It will start with an Executive Summary, which explains the purpose of the plan and an overview of what you’re going to do.
The plan might have paragraphs on themes such as:
- about the company
- your plans for the future
- who your competitors are
- the market(s) you operate in
- the marketing and sales strategies
- what kind of resources and funding are in place
The better you can explain what your idea is, where you’re coming from, and what your competitive advantage is, the more sense your financial projections will make. Projections without context aren’t convincing, and if you’re going for any kind of financing – loan, investment, funding – you need your plan to be credible. This section is something that only the business owner, or someone actively involved in the business, can write. But because you’re familiar with all the elements I’ve mentioned, it shouldn’t take too long to get this part right.
The financial projections section of the plan will simply cover your Profit & Loss (P&L), Cash Flow, and Balance Sheet – usually for the coming three years. Some business owners find doing this a challenge, but that’s where working with an accountant really helps. Projections predict revenues and costs on a monthly basis, and you’ll want to dig into the breakdown of these figures to show where in the business the money is having an impact.
Using Liveplan to create your business plan
With the numbers squared away for the next 36 months, hopefully under the expert eye of an accountant or a finance-savvy advisor, you can start on the plan itself. I recommend using a cloud tool for this. You’ll avoid the endless email chain of feedback and have one easy point of collaboration with just one central version of the document.
Liveplan is a tool I’ve been using for a few years now. I use it for my own business plans for Beyond, but I also use it to collaborate on business plans with our clients. It’s simple to use, has a nice UX, and outputs your work into a clean PDF that’s ready to send. It even comes with templates and sample projects to give you inspiration. Charts and graphs are automatic, so you can turn important data into easy visualisations.
Liveplan can handle quite complicated information. For example, you can input different revenue streams, have revenue per unit or per month, have different classes of employees starting on different dates, include employer’s insurance, or apply VAT to sales. It will also take your P&L and extrapolate cash flow, which is something people find difficult to do (you just have to input some basic assumptions).
If you’re a Xero user, it’s possible to connect with Xero for some basic information sharing. This means you can pull up your previous year’s figures so that you can compare your budget to your actuals in Xero. I’d like to see this integration developed further so that I can take last year’s information and add certain criteria across the board (for instance, run last year from Xero and add 10%). But it’s a good start in terms of integration and I expect to see improvements as the platform develops.
Liveplan pricing starts at 15USD per month, which includes features such as the Xero or QuickBooks integration, custom themes, sample plans, benchmarking, dashboards, and performance tracking.
Don’t neglect your business plan once it’s done!
Once you’ve added your logo and eye-catching images, and your business plan is a slick and polished PDF, it’s tempting to think that’s it. But don’t just dump it in a virtual drawer and forget about it! Refer to it regularly and see if your projections are panning out (another reason having your books bang up to date is so useful). Once a year, take some time to update it – both the financial and narrative – so that it’s ready to be used whenever you need it. Business plans are a great tool and should be used much more than they are.