Paul Smith is one of the Growth Hub’s most experienced business advisers. Here, in the first of a two-part blog, Paul talks us through one of the first steps to creating a business, which can also be one of the most challenging: writing your business plan.
Creating your business plan
Most businesses know that they ‘should’ do a business plan. But some of the most common questions we are asked is what needs to go in them, suggesting that although people know that they ‘should’ do a business plan, they don’t necessarily know why.
When it comes to creating a business plan, I like to think of it as like filling in the jigsaw.
The client will obviously know plenty about their business, but they don’t know what they don’t know! That gives me the opportunity to ask ‘have you thought about this, or that?’ and start to show them how to build a business plan which doesn’t rely on one of the countless templates that can be found online.
When I meet start-up clients for the first time, I always advise against using a business plan template, because it suggests you’ve got ‘the whole book’ sorted in your mind. Instead, I suggest they grab a single sheet of A4 paper and write down what it is they want to do, why they think it’s a good idea, why they feel they’ll be good at running it, who they’ll be selling it to and how much money they need to make.
For each of those bullet points, I ask that they write just a couple of sentences; that’s it!
I illustrated this to one of my clients recently as a graphical image of a jigsaw, because it doesn’t matter if you don’t have every section of your business plan thought out. Instead, think of each one as a piece of a jigsaw; the bits you know are clear to see – as are those you don’t. You can build from there.
Strengths, Weaknesses, Opportunities and Threats
I had a client who – in our conversation about business plans – explained that he could show me his in a series of spreadsheets.
This prompted me to ask him whether or not he had performed a SWOT analysis, and the response was “oh, I don’t believe in SWOT analysis!”. This is a common response, but a Strengths, Weaknesses, Opportunities and Threats analysis is a vital part of every business plan.
It doesn’t have to be in-depth as such, but thinking about and knowing what opportunities are on the horizon that could benefit your business, and likewise, what threats there are to your existence, will really inform the steps you take. It may be that you have them all in your head, but writing them down to refer to them and remind yourself frequently is a great way to follow a basic strategy.
In this instance, I asked the client to give it a go by first writing down the weaknesses and threats and then spend some time figuring out how he was going to work his way around them. At this early stage it’s important to see the weaknesses and threats as problems to be solved, rather than a tick in a box for a business plan.
Critiquing your plan
We do a lot of business plan critiquing at the Growth Hub. What we try to do is get people to be a little bit sharper than simply noting down ‘if we do this, that will happen’. We want to instil a mindset that says ‘we need to change our strategy, and here’s the logical steps we need to check against the business plan.’
At a practical level, this means having a working document that you get used to going and looking at regularly, rather than just leaving on a shelf or in a hard drive and never referring to. If you change your business plan, save the file with a different title that includes a date stamp – that’ll enable you to easily see how up-to-date your business plan is when you go looking for it.
If you need help creating or critiquing your business plan, contact us – we’re here to help!