Planning remains key to business success

If you fail to plan in business then you simply plan to fail, says Stephen Duffety, managing partner at Baker Tilly's East Anglia office

If you fail to plan in business then you simply plan to fail, says Stephen Duffety, managing partner at Baker Tilly's East Anglia office

THE importance of a sound business plan cannot be stressed enough.

Managers, lenders and shareholders will all be interested in it and a robust, sensible, challenging plan is something that can add credibility, and reinforce the company's ability to succeed to the outside world.

Yet it is surprising how many business plans are totally inadequate, lacking sufficient research and thought. This does not provide any sturdy foundation for business success, either now or in the future.

To develop a robust and effective business plan, there are some basic steps that business owners need to take.

Firstly, you need to make some realistic assumptions. Don't waste time and money producing a plan if it does not properly reflect the business. You need to refine it over time to reflect changes in circumstances, and it needs to be flexible, to show the impact of a variety of economic conditions. Changes in turnover, margins or overheads need to be taken into account.

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Although it is not the cheapest option, you are able to get independent help when creating your business plan. The closest analogy would be that of writing a will without the help of a lawyer. Yes, you can do it, and in some cases it will work the way you hope it will, but if this approach is found wanting, it is often far too late for anything to be done about it.

Furthermore, having an independent view will help you to be realistic about what you can expect to achieve. It will also mean you can benefit from the experience gained from the adviser in creating other business plans for various companies, from what works and what does not work, and knowing it will be rigorously tested to ensure it stands up to examination.

There are certain elements which are key to a business plan. For example, you will need a profit and loss forecast, a balance sheet and cash flow plan. This is very much a three-legged stool. If any leg is missing, the forecasts are not robust and could contain significant errors.

A business plan being communicated to the outside world also requires narrative to explain the rationale behind major assumptions within the forecasts. It has to demonstrate the thought processes and improve the credibility of the plan.

Above all, business plans must stand up to interrogation. Anyone who has seen Dragons' Den on the television will know the importance of a business plan that is rigorous and does not fall to pieces when it is examined closely by lenders and other interested parties.

Above all, always take the time to get your business plan right. It is a reflection on the way you do business, so let it speak volumes in your favour.

For further information on this and other business advisory issues, please do contact us at Baker Tilly's East Anglia office on 01284 763311 or by e-mail at