About half a million businesses are set up in the UK annually. The problem however, is that one in three of these businesses pack up within the first three years of operations according to statistics. Why is this the case?
To a large extent, the difference between a successful business and a failed business is planning. The key to any business for the duration of its life span is planning. Planning provides a framework for guidance, which can be reviewed from time to time in order to keep tabs on your progress, and becomes the basis to map out strategies for the growth of your business.
Preparation is the Key to a Successful Business
The first step towards a successful business is adequate preparation and planning. Without a plan, your business operations are bound to be spontaneous and reactive. A business plan requires that you map out the future. This is as important as laying out a plan on how to secure funding for your business, because a projection into the future of your business using a business plan is what helps you align specific goals and objectives with resources and funds that are needed to achieve the goals.
Setting up a business involves funding. A business plan helps you clearly map out your funding sources. If you desire external sources of funding, the lenders need a business plan that describes what they benefit by investing in your business.
A business plan is also a document that projects the future course of action of the proposed business. It helps with projecting future opportunities and strategies, which can be assessed from time to time, in order to monitor progress.
A major aspect of a business is management of cash flow. A good business plan helps with the careful management of cash flow. Given that a good business plan is vital to the success of your business, what should a good business plan entail?
Planning your Business Plan
You need to determine what your objectives are. Projecting into the future, there are some milestones that you anticipate your business would have crossed, or some goals that would have been achieved. Determining your objectives is an important part of a good business plan. This should include the benefit of the business to the customer, and the growth prospects for the future. In a nut shell, your business plan should contain your marketing aims and objectives.
Another important aspect of a good business plan is the operational and financial information. You need to clearly indicate how your business will operate and make financial forecasts.
If it is a sole proprietorship, clearly stating an exit plan is essential. Possible options are through family succession, business sale, floating the business or closing it down.
Additionally, when there are external investors involved that need to see your business plan, it is important to include your aims, objectives and projection for each area of the business. Also, information about your product or service and the qualification of the management involved in the business is important.
Indeed, preparation is the key to a successful business. This cannot be achieved without preparing a business plan.