If the last year and a half has shown businesses anything, it’s that crises aren’t just some abstract idea to speculate about. At any point, without warning, your business could be plunged into a period of hardship.
While nobody could have predicted the economic shock that we experienced early last year, it does demonstrate the importance of assessing potential risks and threats to your business, and forming a contingency plan should the worst happen.
With a strong and comprehensive business plan, you’ll have the power to get through any other challenges that might arise, as well as having a clear roadmap to your long-term business goals.
A good business plan will ensure you retain your USP, stick to your target market and tailor your products or services to them, even when tough times call for a rethink on certain aspects of your business.
A plan will also ensure the day-to-day work of your business fits in with your main business goals. When challenges arise, businesses need to stick to what sets them apart – their brand.
So, when the pandemic closed down restaurants, you didn’t see fine dining restaurants open up drive-throughs to keep business alive. But with a proper understanding of who they were, some were able to adapt and carefully craft suitable delivery services, for instance.
By setting yourself specific milestones and success indicators, you can also maintain your focus on driving growth during tough times.
Typically, business owners set financial goals. Sometimes, they judge growth by new hires or expansion to a new location.
Whatever your milestones are, you’ll find it easier to adjust to a challenging spell if you have some already in place. That way, you won’t have to start from scratch – you can adjust your goals to make sure your business doesn’t stall during a challenge.
Monitoring your cashflow isn’t just about looking at the profits you’ve made. It’s also about the money coming out of your business – your loan payments, overheads, and the products and assets you’ve paid for. With various payments to keep track of, a well-developed financial plan is essential to succeed even in the best of times.
It’s not like looking into a crystal ball, however. There are always too many unknowable factors that could take your business one way or the other.
But, if you prepare multiple forecasts to reflect different types of performance (poor, average, good), you’ll be more prepared for whatever might come your way.
If a challenging situation does arise, you’ll have a head start if you have a business plan that includes financial forecasts. These will help you quickly sort out your priorities, identify which activities are most profitable and work out which you could do without to save on costs.
It’s worth mentioning that forecasting is also a great way to ensure you’re putting enough cash aside for a future project or rainy day, and that you can afford to do so.
Business planning isn’t just about paperwork, however. It’s more than that – a tool to build credibility with investors, lenders and funding bodies.
Investors won’t just hand over their money to you if they aren’t secure in the knowledge that you’ll use it to grow your firm to get them a return on their investment.
It’s also standard for lenders to see a business plan to show that you’ll be able to pay back what you owe, including interest.
Make sure you’ve included financial models to help you secure investment. Not only will they show how you’ll succeed, but they’ll also demonstrate that you’re serious about the health of your business.
A strong business plan could spell the difference between getting investment and not, which in turn could eventually spell the difference between success and failure.
Reach out to us on 0115 960 8412 or fill in a contact form to discuss your business plan with us.