Business Planning White Paper

What is a Business Plan?
A business plan is a forward-looking document that explains how a business is going to evolve.
Business Plans are useful for all types of business whether they are commercial or not-for-profit;
large corporate or small application developers.
What does it do?
A business plan should define the direction a company intends to take over a specified time period
(often known as a ‘time horizon’). It should answer the questions:




What is the business?
Who is it for?
What service does it provide?
Why is it different?
How does it intend to grow?

The plan should capture the imagination of the reader and inspire optimism and belief in the
company.
What is the Plan for?
A Business Plan is a routemap to a specific objective. The objectives of commercial organisations
are often orientated towards maximising growth, maximising profits or achieving a level of cash
holding or a combination of these. Not-for profit organisations may have different objectives, for
example, building a school in Africa or providing a certain number of Christmas dinners. Even
commercial organisations can have non-commercial objectives. An elderly or fulfilled business
owner may simply aim for divestment and retirement. Whatever the objective a plan is required to
mobilise resources to achieve it.
When do you do it?
The questions about whether the business is distinctive and viable should have been addressed in a
preceding business concept evaluation which is a precursor phase to business planning. A business
proposition evaluation (BPE) is performed at the stage where a potential business is little more than
an idea and before a full business plan is developed. It is used to clarify business ideas, filter out
non-viable ideas and deliver ideas with intent. A BPE can save a lot of time establishing the wrong
business and writing business plans for businesses which aren't going anywhere.
However, business planning will take this analysis to the next level of detail and the Plan should
deliver a compelling case for the business’ viability and sustainability. A business should always
have a plan, even though that plan will evolve as the business progresses. Even businesses that
intend to close should have a plan. A business plan can be used to support an application for funds.
What are the characteristics of a good Plan?
A good plan will have:



Context: the position of the company in the business landscape
Substance: an elaboration of what the company intends to do
Products: key milestones and deliverables, including product launches and injection of funds
Purpose: a reason for existing, for example, to coalesce resources around a shared vision

retail. Credibility: the physical assets and intangible resources at its disposal  Robustness: based on sensible assumptions. intellectual property patents Financial model: sales forecast. innovation. though. why this offering is useful (what originating problem does it solve). and investments. A degree of market testing is required to show that potential clients are prepared to hand over real cash for the service on offer. The source of funds for a business will be either established or proposed: in the latter case the business plan will be used to underpin an application for inward investment. competitors. There should also be a profit and loss account showing the assets (cash. production costs. in some cases. route to market Assets: staff. trends. the proliferation of personal 3G mobile devices accessing near limitless data has created a market for applications (‘apps’) that give users geographically referenced information filters. its organisation and processes. Often. target market. What does a Plan contain? A business plan should address the following topics:         Strategy: what is the business? what is it for? mission. direction or focus. facilities. the planning process will uncover lack of clarity. creditors) to show that the business is solvent. The Plan must show that there is a market ‘pull’ arising from some problem experienced by a significant number of potential customers. objectives Offering: commercial position (business-to-business. The reader will want to know that the Company can support itself financially or that it has a source of funding. or refer out to. often with a range of ‘what ifs’  Viability: based on sound finances The discipline of generating a Plan will ensure that all of the key aspects of the business have been addressed. financial vulnerabilities. debtors) and liabilities (loans. This will be based on assumptions concerning number of sales. the financial assets. previously unknown competitors. cashflow. For example. For some people the most important aspect of the Plan will be the description of finances. or areas for further research. new development Operating model: how the company mobilises its assets to deliver service. vision. All companies have features that differentiate them from the rest of the market. size. business ownership. current state of the art. sales patterns. administration). segments. equipment. indirect costs (staff costs. differentiators Technology: technology required. Some of the objections to planning can be characterised by the following challenges: . equipment. The Plan should include. or not-for-profit). a set of accounts showing the forecast cashflow. applicable statutes and regulations Market: market characterisation. facilities. planned expenditure. and a description of the product(s) or service(s) on offer Legal aspects: registration. rent. Challenges to Planning Not all entrepreneurs and emerging companies are convinced of the value of business planning. where they aspire to reside in the market and why they are sufficiently different to command a position in the market which generates revenue. source of funds Many businesses fall into the trap of looking being too introspective and not recognising the needs of their customers. The Plan should explain how the company characterises the market. those differentiators are insufficient to realise a viable business.

Here. some of those objectives may not have a monetary value. business plans are required to mobilise the resources around shared goals. He is Managing Director of The Business InQbator in London which mentors entrepreneurs and grows businesses. Even singleperson operators need to identify their challenges. Often a Plan will be required to deliver a compelling case for inward investment. ‘We are not for profit so we don’t need to plan’: A Business Plan is a routemap to specific objectives. and manage their finances. Where the plan is designed to market the company. Tailoring the Plan A quality business plan should always be tailored for the intended audience. Not planning encourages heroic activity which often leads to burn-out and isolation. mobilised projects and managed teams of up to 120 people. Kim Dolman Managing Director The Business InQbator Ltd 07855 978674 The Author Kim has spent many years working for corporate in the field of engineering and technology where he won new business.    ‘We are too small to plan’: Planning is important for a company of any size. including launches and publicity. Even for commercial organisations. more detail will be required to validate future sales forecasts. then it can contain company confidential information and should written in a style that motivates and communicates. attention will be on products and services. For example. justify any changes to costs and evidence orders. if the Plan is primarily intend for an internal audience. . ‘As soon as the Plan is written it will be obsolete’: Businesses rarely evolve exactly according to plan and entrepreneurs must always be ready to respond to step changes in the external environment by re-planning. ‘We are too busy to Plan’: It has been said that ‘Failing to plan is planning to fail’. set their priorities. Nevertheless. Whatever the objective a plan is required to mobilise resources to achieve it.