Creating a business plan is a crucial step for all companies, not least because the document may be required by potential investors, finance providers and other stakeholders. Business planning includes outlining the goals you have for your company, along with projections for the future performance. Of course, being realistic and providing as much information as possible will make the document credible to potential lenders and investors.
Accuracy
It’s difficult to accurately project figures for the future performance of a company, as they can be affected by a number of factors. Company benchmarking is one option for a company, while outsourced accounting and analysis will help to produce forecasts and statements. Be completely realistic when forecasting so that you can prepare accurately for your business in the long term.
Financial analysis
Financial analysis is crucial for a business plan, as investors will want to know that they are guaranteed to receive a healthy return on any investment they make in your firm. Include all financial analysis such as how much investment is required, what it will be used for and a forecast of revenue. Detail all capital existing in the company and a budget for future capital.
Profit ratios need to be included, as does a profit and loss account, income and expenditure, and cash flow forecasts. Although it is presumed that you are basing many of the forecasts on estimates, you can employ company benchmarking to make sure the figures are as accurate as possible.
Demonstrate research
Although a business plan is based mainly on forecasts and projections, include details of research undertaken in the industry. If you have based your assumptions on facts, note the details of them so that any investors are aware that you have conducted extensive research. Include statistics, graphs and other visual evidence of your claims, thus increasing the chances of your business plan being believable.
Creating a realistic plan
All investors and finance groups will want to see evidence of a convincing plan before considering investment or a loan, so include more than just your goals for the future. Create a roadmap that has goals for short, mid and long term, but also state how you intend to get there. Also, demonstrate an understanding of the risks and how the company would deal with them.
Planning for your company is about convincing potential investors that you have a solid understanding of the business, where it is heading and how it will get there. If you would like to discuss any challenges you have faced when planning your business, contact us to arrange an informal chat.