Often when I mention the words “business plan” to people, whether they are just starting up in business or already established and looking to grow or change their business, they give me the “do I have to?” look!


Business plans haven’t been dreamt up by accountants to allow them to charge a fee to their clients for “added value” services or simply to bore you to tears.  Every book you read about business success and every leader you hear speak will highlight the necessity of planning.  So “yes” you really have to, unless you like to live life by the seat of your pants.

Failing to plan and planning to fail

If you are starting up your business and you don’t have a plan, how do you know

  • what that business will do
  • what it’s target market will be
  • how it will work  (processes, structure, personnel etc)
  • how it will be financed? (funding, cash flow, collateral/security/personal guarantees etc)
  • whether it will make money and
  • whether you will get out of it what you want?

Are banks still lending?

There has been much reported in the news over the last year or so about how difficult it is to get bank lending nowadays for small and medium sized businesses.  Ask any business bank manager this question and they will quip “we’re always open for business” but there is no doubt that they are being very cautious. If anything is going to help you get the banks on your side,  it will be a comprehensive, well thought through business plan with back up for your assumptions and a realistic timescale for paying back the loan.

If you want to approach an investor, your business won’t even be considered for investment if you don’t have a business plan that you can back up with facts and figures that make you and your business a credible investment.


Getting value from the planning process

Planning is not just something business owners should do when setting up their enterprises or when getting finance.  There are plenty of benefits of planning on a regular basis.

  1. Take the time to think through a plan and then write it down, you are more likely to actually do it than if you keep it in your head.  Even better, communicate that plan to a trusted adviser such as your accountant or a business coach who will be able to help you evaluate it and provide an objective viewpoint.
  2. Take off your rose tinted glasses, a great looking plan may make you feel good now, but it will demotivate or be dismissed as irrelevant later.  Be realistic and honest with yourself and don’t forget to factor in non-monetary elements such as the amount of time you intend to invest. 
  3. Use the planning process to brainstorm.  Perhaps carry out a SWOT analysis to help you to ‘stretch’ your thinking.
  4. Use the plan as a way of involving key people in your business.  This will help them to be more committed to the results and encourage leadership/loyalty.
  5. Most of the ‘added value’ of business planning comes from regular reflection.  Don’t take the time to write a plan and then archive it!

In summary

A good business plan will help you to understand where your business is going, give it structure and direction, provide a communication channel for key stakeholders and build credibility when obtaining any funding or investment that you need from external sources.

If you haven’t got an up to date, clear and realistic business plan, take action now. 

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

One Comment

  1. Paul Shadbolt says:

    Taking a bankers perspective then firstly,at Lloyds TSB Commercial we are lending money to viable businesses.
    The importance of a robust business plan for start up businesses in raising finance cannot be under estimated, and I agree with the logical approach set out by Toni.
    The challenge with any lending request for new businesses is to substantiate the sales projections – why does the business owner think they are achievable, how do they benchmark in the market place, why will customers buy the product/service and how will the owner differentiate from the competition.
    How will the business cope if sales are say 30% less than projected, and the customers take twice as long to pay?

    Paul Shadbolt
    Senior Manager Commercial
    Lloyds TSB Commercial Cambridge
    07802 433988

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