Fueling economic recovery: The vital role of a solid business plan to empower SME’s
By Damian Hanson, Co-Founder & Director of CircleLoop
The news of rising interest rates and inflation has created unprecedented challenges for businesses across the UK, but causing particular concern for small and medium-sized enterprises (SMEs) which have been hit the hardest in recent months.
A PayPal study in 2022 found that three-quarters (78%) of business owners feared that the rising cost of living would be the biggest threat to their business over the following year. Now that we are in 2023, many business owners are still trying to stay afloat whilst preparing for even tougher times ahead.
Not many businesses can anticipate the unexpected hurdles, but one of the most valuable tools for empowering SME owners comes in the form of a well-thought out business plan. So what makes a business plan vital to help fuel economic recovery for the SME sector?
Do you really need a business plan?
The short answer is yes, especially now. As the world strives to recover from economic uncertainty, having a business plan is a lifeline in an otherwise turbulent environment. A study in the Harvard Business Review found that businesses that have a written business plan in place have a 7% higher probability of achieving high growth compared to those without one. Having a well-crafted business plan can assist in goal setting, identifying potential roadblocks and the ability to navigate complex business issues as and when required.
They provide SMEs with a clear roadmap to achieve their goals and objectives and are an invaluable strategic tool. It helps them to identify their strengths, weaknesses, opportunities, and threats (SWOT), a common strategic planning technique to help assess key factors that might affect your business.
In some cases, businesses will often require a business plan before they consider reaching out to investors or even receiving a loan and so it can help SMEs secure funding by demonstrating their potential for growth and profitability – something that many are struggling with in the current climate. The benefits of having a well-versed business plan speak volumes to investors and stakeholders alike and can distinguish the business from its competition.
Five steps to developing an effective business plan
Here are five steps for developing a business plan that will help you focus your businesses future:
Defining your company’s purpose and objectives
The ‘Why’ and ‘What’ of your business are important first steps to any business plan. Why does your business exist? What is its purpose? Establishing this gives your business a guiding light through challenging times and benchmark to measure all business decisions against. Similarly, objectives explain what it is your business wants to achieve. Again, establishing your main objectives in your business plan helps to give further guidance for important decision making.
Conduct Market Research
The next step is to conduct thorough market research to identify the target audience, competitors, and industry trends. This information will help SMEs understand their market position, customer needs, and how they can differentiate themselves from competitors.
Develop a Communications Strategy
Your marketing strategy will help you reach your target audience in the most direct and impactful way possible. You’ll need to identify the best channels to use and the appropriate methods of communications for each. Your goal might be to raise general awareness of your brand, build credibility and reputation or simply drive sales – the strategy will lay out how you’re going to achieve this.
Define the Financial Plan
The financial plan is a critical component of any business plan. It should include projections for revenue, expenses, and profits, as well as an analysis of the funding required to start and grow the business and how you intend to raise it. This part is of particular interest to investors, so the more detail the better.
Establish Your Tech Stack
The tools and technologies that will be of high importance to the day to day running of business will be critical to establish early on. From customer relationship management tools, to a cloud-based business phone system for internal and external calls, finding the best tools for the job and defining the processes around them will become invaluable as your business grows.
SMEs play a critical role in driving economic growth, innovation, and job creation, making it essential to empower them as the world strives towards economic recovery. Having a well-developed business plan can help SMEs make informed decisions, secure funding, and measure progress towards their goals.
It’s worth noting that a business plan will grow and evolve along with a business, making it an important part of the entire business journey and, not just the start.