It turns out that 2016 was a record year for new business start-ups. According to an article published in the Telegraph, 80 new companies were born every hour last year. With the way in which we work becoming more and more flexible, it may be that 2017 is even more of a record breaker in spite of Brexit – watch this space for the figures once they are published.
The same article goes on to say that the number of business that fail has decreased, but the reality is that there is still a number of new start-ups that will not get to their first or third birthday. Why? It’s all in the planning…
The importance of preparing a business plan
When starting out you are full of enthusiasm and every new sale or commission is a cause for celebration. You are busy and you are making money. Things will reach a plateau at some point though. And that is where you will most need to turn to your business plan to see what you had put in place to get over that bump and keep rising. However, many businesses never sit down to write a plan. Despite how busy you are, it’s worth spending a bit of time putting some thoughts and plans to paper to help you overcome the difficulties that will inevitably crop up along the way. Here are a few reasons why you should:
- For help financing your new venture. If you are looking for a bank loan, overdraft, or investment you will need a business plan. This should set out what your business is aiming to do in the initial months, first year, and first five years including costs and income projections, how funds will be invested and what return on that investment is anticipated.
- To set your business strategy. This will help you set the course that you want your business to follow. It can start out in an informal way but should ultimately become more formalised as you see your business become more established and it should be linked to our financial data and projections.
- Set out a marketing plan. From helping you to determine who your target audience and demographic is to deciding on your messaging and communication channels, a marketing strategy helps put your business plan goals into motion.
We have talked about some of the tools to help you prepare a business plan before – take a look back for a quick refresher but if you are new to this then it is easy to avoid the things that are not as familiar, particularly when things are going well.
It is important to revisit your business plan on a regular basis, once a year on your business birthday is a good time to do so. It will help you to understand how the business has done in that time: has it grown, declined, gone in a different direction, grown in terms of staff size, etc.? By having a benchmark and plan against which to measure any change it will help you make informed decisions about the best course of action in the following year.
Need an expert’s helping hand?
For advice or help in preparing or reviewing your business plan talk to us at Hammonds Accountants. We are here to offer a helping hand to get you on to the right path from the start and to stay on it for the whole journey. You can call us on 020 8249 6328 or drop us a line on .