Business plan: is it the right time to write yours? | Article – HSBC VisionGo
Writing a business plan is crucial when things go south. Big picture definition, financial planning, strategic thinking, they can help entrepreneurs.
Let’s be very straightforward: business plans aren’t just futile exercises made for bankers and investors. They are also every entrepreneur’s best friend, especially when the economic situation tends to go south. The question is, why should you, and how can you do it in the least time possible.
Let’s face it, writing a business plan is often seen as one of the biggest pains possible by entrepreneurs. The thing is difficult to write and it keeps changing, plus the priority is often to do business more than to plan it. In the end, the conclusion is usually the same: we’ll see later.
The problem with that approach is that planning is not something you should leave aside. Especially when things go wrong around you. As business advisers, we’ve seen many businesses go on with their activities without even rethinking things, and we’ve seen some bad results so, in this article, we’re exploring two topics: why, and how. Keep reading.
Why entrepreneurs should work on a (quick) business plan. Hint: not just a banker’s thing.
That’s a common myth, but entrepreneurs often think that business plans are mainly a topic relevant to bankers and investors. Until there’s a need for funding, said differently, no plan is needed. Yet, the reality is that a business plan has different functions depending on the perspective you take.
Business plans and bankers.
From a banker’s perspective, a business plan is mostly a question of making sure that you (as the captain onboard) know where you are going AND that you have the ability to repay the loan you seek in due time. To that extent, the stake is not just to put your business to the test but to work out the various possibilities of adjusting various angles, in ways that are financially sound.
Business plans and investors.
An investor’s perspective on a business plan is rather different. The point is not to seek immediate repayment of a loan but to make sure (as much as possible) that the project will produce a return on investment three to five years from now.
The idea, in that case, is thus not to check your ability to repay but your ability to find a product-market fit and to conduct the project adequately, in line with a vision, with a robust team, so forth and so on. The numbers are important, of course, but the target is rationality and profitability rather than repayment capacity.
Business plans and entrepreneurs.
At the end of the day, what that means is rather simple: don’t write a business plan FOR bankers and investors. Write a plan for yourself, making the most of their respective perspectives. Think about what you want to achieve, define what needs to be done, who you need to hire, and what money you need. Build a project that’s sensible, but dream and make others dream.
Business plans when things go right, and wrong.
Clearly, the point of building a precise big picture of your business is important when it comes to building your dream business. It helps setting deadlines and milestones, it helps with implementing smarter goals and turning wishful thinking into concrete plans that others want to push forward as well.
Even more importantly, writing a business plan is even more important when things actually go wrong. Now, we know, when things go wrong the reflex is to focus on the operational stuff because making cash is the primary target. But what if thinking big picture helped to get out of trouble?
When that’s the case, in fact, the best thing you can do is look at what you could do differently. What is your market like? What else could you do? How are your competitors? What is your positioning like for the future? Do you actually have a niche? Are you competing the right way? Are you unique enough? Is your business model (including your pricing) strong enough to get you anywhere?
In short: what’s the plan, really?
How to write a business plan, without pain.
The second big question beyond the “whether” you should work on building your plans relates to “how” to do the job. The exercise is difficult and I struggled with it myself a few times when building my first two businesses a few years ago.
Still, in retrospect, all it takes is a good understanding of what a business plan should contain, and some method as to how to make it happen. So here’s the idea, easy as 1, 2, 3.
The key elements of a strong business plan template.
The starting point should always be this one: a business plan should be built around eight elements – something like that:
- An Executive Summary (to be written last)
- A big picture presentation
- An offering presentation
- A go to market strategy presentation
- An operations presentation
- A team presentation
- Your financial projections
- The corresponding financial documents
Each element should tell a separate and distinct part of the story, and each should be explained on one page tops.
For instance, the big picture section should talk about your vision and about the problem you are trying to solve (as opposed to just making cash) while the offering presentation should describe whether you have a product-market fit. The point sounds silly? You’d be surprised to see how many startups actually forget that having a “great solution” requires having a solid problem in the first place, as well as a targeted client willing to pay for that solution.
Setting the direction.
As far as the GPS is concerned, financials are another big topic. What is your profit and loss estimate? What are your income plans and your costs? Who do you need to hire? Where do you need to invest? Will you run out of cash at some point? When? How much do you need?
Of course, these points are very relevant to investors, but they are even more important to entrepreneurs as they are the ones who need to get things running. Think GPS. Would you get in a car without a map or a GPS, or would you rather go blind and get wherever the road gets you? Well, the role of a business plan is very much about that. Setting a GPS for a business.
Need help? We built the only business plan template you’ll need.
In case you need help to come up with a business plan that makes sense, make sure to have a look at our free step-by-step business plan template and tutorial, it will take you through the whole process with illustrations. You won’t find better out there!
If you'd rather have a fully functional template instead, we at Impactified have built The Business Plan Builder, a business plan tool which will take you by the hand and help you to build everything, including the financial tables (which are the biggest pain ever) and the final document with a top-notch design.
About Antoine Martin:
Dr Antoine Martin is the co-founder of Impactified, the online toolbox for entrepreneurs. Based in Hong Kong since 2015, he supports and coaches entrepreneurs on a daily basis.