Why is it Important to Have a Business Plan?
A well-thought-out business plan can set your company on the right path, providing a clear roadmap to turn your business into a success. It outlines the steps required to achieve your goals, ensuring you stay focused and organised.
However, business plans aren’t just for new ventures. As the year draws to a close, it’s a crucial time for business owners to reflect on their performance and craft strategies for the year ahead. With 2025 fast approaching, turning your vision for the next 12 months into a structured business plan can make all the difference – whether it’s staying on track, improving performance or avoiding potential pitfalls.
In this article, we’ll examine why it’s important to have a business plan, from helping you make beneficial decisions for your organisation to assisting your team in communicating ideas with stakeholders.
What Does a Business Plan Consist Of?
A business plan can help you to:
- Clarify your business idea
- Spot potential issues
- Set out your goals
- Measure your progress.
They are typically made up of several sections, including:
- The business idea
This section outlines the core concept of your business, detailing the product or service you will provide. It should clearly explain how your offering meets a need or solves a problem in the current market.
- Aims and objectives
The aims are the overarching goals of your business, defining its long-term vision or mission. Objectives break down these aims into actionable steps and specific, measurable milestones that will guide your business towards success.
- Your target customers
Identifying your target market is crucial. This section, backed by thorough market research, defines who your ideal customers are, including their demographics, preferences and behaviours.
- Revenue forecast
This is a projection of your business’s future revenue, estimating how much income you expect to generate over a specific period. It can be based on historical sales data or informed assumptions about future performance.
- Projected costs and profit
Here, you will detail all expected expenses – both fixed and variable – and forecast your net profit, which is the revenue remaining after all costs have been deducted.
- Cash flow forecast
A cash flow forecast predicts the movement of money in and out of your business over time. It ensures that your business will have enough cash to cover operating expenses, debts and investments.
- Sources of finance
This section details how your business will be funded, including both short and long-term financing options. It may cover loans, investments, grants or personal savings used to support the business’s operations and growth.
- Location
This part explains where your business will operate, why that location was chosen and how it will impact customer accessibility and business operations.
- Marketing
This outlines how your business will attract and retain customers, covering the four P’s:
– Product: What are you selling and how does it stand out?
– Price: The pricing strategy and how it compares to competitors.
– Promotion: How you will promote your product or service, including advertising, digital marketing and public relations strategies.
– Place: Where and how your product will be available to customers, such as through retail locations, online platforms or distribution channels.
Why Would an Entrepreneur Produce a Business Plan?
Though business plans can be time-consuming, they are an invaluable tool for helping you define your business goals, avoid costly mistakes, mitigate risks, define your target market and produce a pathway to execute your vision.
They can also help others, including employees, lenders or investors, to understand your business and how they can support you or add value to your organisation.
Why You Should Use an Accountant to Create Your Business Plan
Starting and running a business can be incredibly exciting, but it also brings its own set of challenges which can become more daunting if you don’t seek the right guidance. One of the most critical steps in building a successful business – or growing an existing one – is getting expert advice when creating a formal business plan.
Securing Funding
If you’re looking to secure funding for your business, it’s important to recognise that obtaining financing can be challenging, especially since many business ventures are considered high-risk. To improve your chances of success, it’s important to present your financials clearly and professionally.
To increase your chances of receiving funding, a trusted, knowledgeable accountant can help you to:
- Clearly break down your business expenses, making it easier for potential lenders to see where your money will go.
- Forecast expected income from sales (you may wish to look at the wider industry to generate data if you’re a start-up).
- Manage and organise income statements, cash flow statements and balance sheets for a set period.
- Specify the amount you’re looking to borrow and outline how the funds will be used.
Registering For Business Taxes
When starting a new business, you’ll need to decide whether to operate as a sole trader or a limited company. The right choice will depend on your individual circumstances and long-term goals. Consulting an accountant can help ensure you complete all the necessary steps, stay compliant and register for business taxes on time – avoiding potential penalties.
Bookkeeping
Starting your own business also means setting up efficient bookkeeping. Unlike accounting, bookkeeping involves the daily management of your financial transactions, such as making payments, handling payroll and tracking expenses.
At Hartley Fowler, we offer tailored bookkeeping solutions, including cloud accounting options, to help you streamline your financial processes and simplify administrative tasks.
Get in Touch
Now you understand why it’s important to have a business plan – it’s time to take the next step towards making your dream a reality.
At Hartley Fowler, we provide expert accounting services to both new and growing businesses. We can assist you in crafting a comprehensive business plan that not only lays a solid foundation for your operations but also positions you for future growth and long-term success. Whether you’re just starting out or looking to expand, we’re here to be your guide.
To find out more, contact us today.
Business Accounting services – Wimbledon office: 020 8946 1212
Business Accounting services – Brighton office: 01273 202311
Alternatively, book a free consultation.
We look forward to working with you.