Why do you need a business plan?

Developing a business plan is about understanding your idea and your market ‘inside out’ as much as it is about writing things down. Planning is an ongoing process about constantly anticipating, reviewing, adapting, and reacting to your environment. All these factors make business planning more important for the survival of your service.

What can a business plan do for you?

It is essential that the person or team responsible for managing and growing the enterprise is heavily involved in writing the business plan. Managing an organisation is tightly linked to its strategy – you cannot do one without the other.

The process of developing the plan is incredibly useful because it will help you to:

  • clarify what it is you want to do and why you are a social enterprise
  • develop a better understanding of your organisation
  • ensure you understand and are up-to-date with your market
  • create a shared commitment with your stakeholders

A business plan is effectively your map for achieving your vision. It provides the link between your strategy and your required actions. An effective business plan provides an operational framework that makes sure decisions about products, services, customers and human and financial resources allow you to deliver your vision and mission.

You should also start thinking about the different types of legal structures that are available to social enterprises and what each option involves. This is important whether or not you have already registered your company. The decision about your legal structure must be informed by your business planning process and by the operational, managerial and financial implications that come with different legal structures. Therefore, it is important that you develop a robust strategy before making the final decision about your legal structure. Well before settling on the legal structure you should know not only your short-term requirements, but also what you are looking to achieve in the next few years.

Whether you are a start-up or an existing organisation, you should have carried out your market research and developed an understanding of what you are going to sell or provide, as well as who is going to buy or use it, i.e. your market. You cannot write a business plan without defining your products and services and being positive about what your enterprise does.

On the other hand, the strategy surrounding the business plan is a work in progress. As you write the business plan, some things will change, others will be clarified. A business plan is going to be an ongoing process that you review regularly and adapt to new opportunities, threats or other changes, so do not worry if things evolve as you go along.

What can a business plan be used for?

Internally

  • for those running a service to articulate what it is they want to achieve. It allows thinking to be focused. The plan then acts as a checklist or guide against which to measure future activity.
  • for employees to get motivated and buy-in to the future strategy of the service. It also acts as a guideline against which activities and implementation are undertaken.
  • for internal stakeholders such as investors, trustees or board members to create or reinforce confidence in the management and the proposed strategy.
  • as a resource to refer to or use when making funding applications.
  • within larger organisations as a document to convince budget holders to support and fund your department or project. The internal budget holders could be senior managers or trustees.
  • to identify risks and allow you to create strategies to prevent or minimise the risks.
  • to help you plan, deliver, measure and communicate the benefits, outcomes and social or environmental impact that your enterprise has created or contributed to.

Externally

  • the funding or finance requirement is probably the greatest driver for people preparing business plans.
  • it is also a requirement by commercial lenders (e.g. banks) and investors to understand the service and the logic supporting the request for finance.
  • though grant funders tend not to ask for business plans the funding application is effectively a synopsis of the business plan to justify the grant requested.
  • for potential partners and collaborators to better understand you and your service and why it would be worthwhile engaging with you.
  • for influencers and networkers that could potentially promote you to other supporters, partners and funders.

Business Link, the government’s online resource for businesses, has an excellent guide for business planning for social enterprises. It takes you through the process of business planning step-by-step – definitely worth a look.

Things to keep in mind

Your business plan is a communication tool for you and for your service. It may have a very broad readership of people internal and external to your organisation. You need to be clear and concise. Any assumptions you are making about your business, your market, your operations, etc must be reported.

Do not assume the reader of your plan knows anything about your service or your market beyond what you have included in your plan. Many plans confuse their readers because the author is so familiar with the content that they take for granted everyone else is in the same position. Ask other people to give feedback about your plan.

A business plan may be the only document or information that an external reader, for example a lender, investor or customer, has seen about you. Their decision to support you or work with you will be based on it. They will be judging the service and your management ability on this one document.

Things you should do

  • Include a table of contents and page numbers.
  • Try to keep the plan to fewer than 20 pages (not including the appendices).
  • Use bullet points and numbered lists instead of long paragraphs, or to clarify specific points.
  • If possible include diagrams, graphs and photographs.
  • Get someone who knows a little about your service and your market to critically read your plan, and make the required changes.
  • Keep to the point and ensure what you are writing is relevant for the particular section.

Things you should avoid

  • Do not confuse the reader.
  • Avoid long sentences.
  • Don’t use technical words and unnecessary jargon. If you have to use a technical term, define it.
  • Avoid acronyms (initials) but if you have to, define the initials and their meaning.

 You know you’re winning when

  • You are clear about your vision – what you want to achieve with your service
  • You have a strategy – a realistic idea of how you are going to achieve it: how much it will cost, low long it will take, who you will need, what legal structure
  • You are clear what your business plan is for, and that it will change and develop.
  • All important aspects have been covered, including
  • Organisational Structure
  • Marketing
  • How things will run day to day
  • How you will measure performance
  • How management, personnel, funding and finance will work
  • You are confident your Executive Summary contains all the most important information about your proposals
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