Before starting any new business or before starting a new division for your existing business you should build yourself a business plan. A business plan is a document that details both financially and in a narrative what you intend to do, how you intend to do it and what you believe you can make out of it.
Consider all of the items that impact your business
Don’t try and knock your business plan up in just a couple of days. You need to consider all of the items that could impact your operation. If possible, talk to other people in the industry or potentially in related industries and find out what their major costs are and how they manage their operations. Once you have done a bit of digging you can create a pro forma P&L of all of the items that you think are relevant.
It’s not just numbers
A good business plan should include a really good narrative regarding what you intend to do and how you intend to do it. You should go into detail about what you perceive as your opportunities and what you perceive as your threats. Your narrative should work with the numbers to tell a story.
Get a second opinion
Don’t try to do it yourself, as you are more likely to miss items. Talk to as many knowledgeable people as you can. If you do not have a financial background then it could be a good idea to talk to an accountant or your bank about how well your financials stand up.
Revise your business plan regularly
Creating a good business plan is not just about formulating a plan at a specific point in time and then locking it away in the cupboard. A good business plan should form the starting point for your budget and you should then review your assumptions every 3 months or so. It would help if you then revised your plan as you get more details of what reality looks like.
Share it with your bank
Once you have created your bulletproof business plan you should think about sharing it with your bank or your finance provider. Your bank will be a lot more confident in your ability to deliver if they see that you have put in the time and effort to prepare a proper business plan.
