You are now at the stage where you can plan your business. This is a challenge. This is where you transition from general ideas of what you want to accomplish to specific tasks for how to accomplish them.
How long does a plan need to be? It depends. If your business will be low cost, will rely only on your skill and labour, can grow slowly over time and you don't need to draw an income from your business then you can get away with a very short plan.
Most businesses start without a written plan. 49% of businesses fail within 5 years (NZStat - businesses launched in 2018) whereas 80% of the startup businesses that ENC helped in 2018 are still operating in 2023.
A plan helps you to set a path to your goals while avoiding pitfalls.
There are a number of business planning templates available. All of them are slightly different, most of them are good and none of them are specific to your business. Your business is unique and no business planning template will fit your business perfectly. So be willing to change it, or leave areas blank where they are not relevant. A business planning template should do the following:
- Enable you to tell the story of what you want your business to achieve
- Show the resources and skills you have
- Show the resources and skills you need
- Show the reasons you think your business should be successful
- Show the risks, and how you plan to deal with risks
- Show what permissions and legislation you need to navigate
- Set a timeline
A business plan should also have a cashflow forecast as part of it. We'll discuss that in more detail in the next section, but a cashflow forecast is vital if you are looking for bank loans, funding or partnership. A cashflow forecast is also vital for you to be able to track whether the business is likely to succeed or fail as you go.
A well written business plan gives you direction while identifying risks along the path and helping you solve problems before you get to them. It makes easier to see what your assumptions are so that you can test them.
But a business plan is also fluid. Much of it is made up of educated guesses so whenever you look at another aspect of the business then you may need to review and change your plan to take account of the new information. It will never be perfect, but a good business plan will give you the information you need to identify and address risks in advance and make sure that you have a realistic chance of success.