Planning for growth

Why a great business plan could be fundamental to your company's future success – and how to achieve it

Effective planning is a key element in the success of any growing business, but current evidence from venture capital (VC) companies suggests a high proportion of business plans are ill prepared, badly researched and ultimately of little use.

Venture capitalists revel in the fact they reject more plans than they read. A standard statistic shows that of 100 plans that come to a VC, 90 are rejected out of hand and of the other ten, only one may be funded. Generally, this rejection rate stems from an inability to prepare and present rather than an inherent failing in the business.

Most companies see a business plan as an irritation – an all-purpose document for raising funds when necessary. But long-term business planning is not as daunting or annoying a task as it may seem. There is help at hand from many quarters and companies should not be afraid to seek it.

Writing your business plan

Numerous business books provide a templated short cut to producing a plan. However, to be successful, a business plan should be written in a different way for different audiences, for example, internal use, debt finance, angel finance or venture capital equity.

The business plan comprises many different areas, requiring expertise which is almost certainly beyond the scope and time constraints of most management teams, particularly in small and medium-sized enterprises (SMEs).

A good business plan needs to efficiently and effectively cover the following subjects, in different ways for different audiences:

Industry research
Many companies don't take the time and trouble to research their own industry, let alone adjacent industries which might be attractive for them to diversify into. Research firms do exist but finding the right one can be a research assignment in itself.

Competitor analysis
If your business is still relying on anecdotal evidence regarding your competitors, full-scale, independent analysis could reveal their strengths and weaknesses more easily and provide the scope to move forward more quickly.

Marketing plans
A large number of SMEs cannot afford a full-time marketing expert and rely instead on the expertise of their general management team – yet marketing is probably the vital weapon in their armoury. UK companies are particularly notorious for being unable to exploit innovative products in the marketplace. Too many companies still have the watchword: 'Build the product and the world will beat a path to your door'.

Price modelling
Companies often spend little time analysing the potential effects of different pricing on their products or services. While pricing is more of an art than a science, it can be invaluable to consider how much profit is being made or how many more sales could be achieved at a lower price.

Strategic planning
Making time for innovative strategic planning is difficult when running a business, particularly when there is almost infinite capacity in what you could do. Companies often take a blinkered approach: 'If it's not broken, don't fix it'.

The 3M scheme of allowing employees time off to develop new ideas is hard for time-constrained SMEs. The risk that Swatch took in moving from a traditional watch business to a fashion business came from necessity at a time of crisis.

A better way is to plan on a regular basis and use cost-effective external support where appropriate.

Financial planning
Larger companies usually have finance directors who spend much of their time on financial planning matters. Many SMEs do what they must when they need to, often at the worst time when money is tight. Longer term planning with the assistance of an expert can be of great benefit.

Business Plan Services – cost effective external support

Business Plan Services has built a reputation over 12 years for assisting growing businesses in each of the above areas. It focusses exclusively on early-stage and developing SMEs which are determined to grow rapidly.

Services range from specialised research projects to full, bespoke business plans. It utilises 80 specialist consultants, yet avoids the high overheads which seem likely to be created by larger firms. The support and network of London Business School gives an assurance of quality and integrity. References from hundreds of clients tell their own story.

Case studies
Although 'time is money' and 'knowledge is power' are common watchwords, many companies still persist in a blinkered internal approach to their planning process. It must be assumed that a lack of readily-available and cost-effective assistance is one of the reasons.

The following case studies will help to explain how our process could help you:

Company A is seeking to expand rapidly in order to exploit their brilliant new product range. However, excessive emphasis on the wonders of this product in their business plan is a barrier to funding. Lack of time prevents a wider view of the market place and competition.

Instead, a professionally presented plan would make the difference which enables the plan to reach stage two with a VC. An independent view of the market would be attractive to funders who inevitably see the owner/manager as being biased.

Company B is very successful and does not need funding. Regular long-term planning is at the bottom of the agenda while growth is apparently assured and time is short.

However, the experience of the past few years has demonstrated how easily such success can be reversed. This is the time for external, professional, experienced and specialist help.

Contact
For further information about Business Plan Services or to discuss your specific business planning needs or those of your client, please call Jane Khedair or Michael Anderson at Business Plan Services on 0845 0574065 or email enquiries@bizplans.co.uk