Prepare a business plan for growth
- 1 Overview
- 2 The importance of ongoing business planning
- 3 Drawing up a more sophisticated business plan
- 4 Plan and allocate resources effectively
- 5 When and how to review your business plan
Planning is key to any business. It's sensible to review your current performance on a regular basis and identify the most likely strategies for growth.
Once progress and key growth areas have been identified you can revisit your business plan and make it a road map to the next stages for your business.
This guide explains how you can turn your business plan from a static, 'one-off' document into a dynamic template that will help your business both survive and thrive.
Ongoing business planning means that you can monitor whether you are achieving your business objectives. A business plan can be used as a tool to identify where you are now and in which direction you wish your business to grow. A business plan will also ensure that you meet certain key targets and manage business priorities.
You can maximise your chances of success by adopting a continuous and regular business planning cycle that keeps the plan up to date. This should include regular business planning meetings which involve key people from the business.
By regularly assessing your performance against the plans and targets you have set, you are more likely to meet your objectives. Doing this can also signpost where and why you're going astray. Many businesses choose to assess progress every three or six months.
The assessment will also help you in discussions with banks, investors and even potential buyers of your business. Regular review is a good vehicle for showing direction and commitment to employees, customers and suppliers.
Defining your business' purpose in your business plan keeps you focused, inspires your employees and attracts customers.
If your business has grown to encompass a series of departments or divisions, each with its own targets and objectives, you may want to draw up a more sophisticated business plan.
The individual business plans of the departments and separate business are best integrated into a single strategy document for the entire organisation. This can be a complex exercise but it's vital if each business unit is to tread a consistent path and not conflict with the overall strategy.
This is not just an issue for large enterprises - many small firms consist of separate business units pursuing different strategies.
To draw up a business plan that unites all the separate areas of an organisation requires a degree of co-ordination. It may seem obvious, but you might want to make sure all departments are using the same planning template.
Objectives for individual departments
It's important for each department to feel that they are a stakeholder in the plan. Typically, each department head will draft the unit's business plan and then agree its final form in conjunction with other departments.
Each unit's budgets and priorities must be set so that they fit in with those of the entire organisation. Generally, individual unit plans are required to be more specific and precisely defined than the overall business plan. It's important that the objectives set for business units are realistic and deliverable.
However complex it turns out to be, the individual business unit plan benefit from being easily understood by the people whose job it is to make it work. They also need to be clear on how their plan fits in with that of the wider organisation.
When you are reviewing your business plan to cover the next stages, it's important to be clear on how you will allocate your resources to make your strategy work.
For example, if a particular business unit or department has been given a target, the business plan should allocate sufficient resources to achieve it. These resources may already be available within the business or may be generated by future activity.
In practice this could mean recruiting more office staff, spending more on marketing or buying more supplies or equipment. You may want to provide funds through current cashflow, generating more profit or seeking external funding. In general, it is always better to fund future growth through revenue generation.
Precise budgeting will help you decide on the right level of resourcing for a particular unit or department. It's important that resources are prioritised, so that areas of a business which are key to delivering the overall aims and objectives are adequately funded. If funding isn't available this may involve making cutbacks in other areas.
Once you have drawn up your new business plan and put it into practice, continual monitoring will help make sure the objectives are being achieved. This review process should follow an assessment of your progress to date and an analysis of the most promising ways to develop your business.
This process is called the business plan cycle. Most businesses use an annual plan - broken down into four quarterly operating plans. However, if a business is heavily sales driven, it can make more sense to have a monthly operating plan, supplemented where necessary with weekly targets and reviews.
In some businesses, the cycle may be a continuous process with the plan being regularly updated and monitored.
It's important to keep in mind that major events in your business' target marketplace (e.g. competitor consolidation, acquisition of a major customer) or in the broader environment (e.g. new legislation) should trigger a review of your strategic objectives.
Regardless of whether or not there are fixed time intervals in your business plan, it will serve you best as part of a rolling process, with regular assessment of performance against the plan and agreement of a revised forecast if necessary.
Read our guide Use innovation to start or grow your business.