All great businesses start with a great idea - but the process of turning that idea into a viable business model requires planning.

Don't get me wrong, I know plenty of business owners who run successful businesses without thinking beyond tomorrow but to really grow a business beyond the first couple of years and capitalise on all opportunities, careful planning is a must - and it all starts with the initial business plan.

So what actually is a business plan?

At its core, a business plan is a document that sets out a company's goals and ambitions - it ultimately tells the reader what the business is and what it plans to do.

The contents of a business plan vary from business to business but there are some key areas that should always be covered:

• Business: Why does the business exist and what does it do?
• Market: Who is the customer? Where are they? How many are there?
• Competition: Who else operates in the market? Why choose this business?
• Operating Model: Who will run the day-to-day operations and how?
• Finances: How much money does the business need? How much will it generate?
• Timeline: What are the key milestones?

You can read more on the components of a business plan here.

Why do I need a business plan?

A robust, well-written and thought-out business plan can play a pivotal role in the success of any business - here are our top reasons:

Document and Communicate Business Goals

Building a set of clearly defined objectives and targets will help keep the business focused. I often see businesses trying to jump on opportunities that aren't aligned to their core values and ambitions - this can lead to misplaced effort and ultimately stall their wider business growth.

Documenting your business goals allows you to share them with potential investors and employees so everyone is aligned on what is expected from the business but most importantly it gives you a reference point to refer back to when making decisions - if the decision isn't moving you closer to achieving your goals, it's probably not the right decision to make.

Secure Funding

Whether you're seeking investment from potential shareholders or applying for a bank loan,  you will ultimately need to prove that the business is worth the investment and can provide a return or maintain a repayment schedule. This is impossible without looking ahead and understanding how the finances of your business will likely change as the business develops and grows. The likelihood of securing business funding often comes down to how much the investor or lender believes your business plan.

Understand the Market

Market research is a key part of the planning process. From determining who your customer is to setting prices to decisions around geographical location, you need to know what the competition is doing as well as what the customer wants. The business plan will help you make decisions based on where you want your company to operate within its chosen market.

Focus your efforts

Jumping on every possible opportunity that lands at your door might not be the best course of action for the business. We often see businesses running into cashflow challenges by taking on too much business too soon and not planning the best use of available cash - especially in the early days. A business plan helps you focus on the things that will help your business grow and deliver against the objectives you have set.

Improve Adaptability

Business owners need to deal with change - fact. It's very difficult to understand the impact of change if you don't know which direction you're heading in the first place. Setting up a short-, medium- and long-term plan to structure how your business operates today will help you course-correct when things do not go as planned. You can only ever plan for what you know or think is reasonably likely but unfortunately that isn't how the world works - but having that initial plan established and understanding the longer-term goals of the business will help you formulate a new short-term plan when things inevitably change.

These are only a few of the reasons why a business plan is important but to us they are crucial to success.

Our business development team are always on hand to support or why not attend one of our Business Plan workshops. Find out more here.