Business Plans – Don’t listen to David Brent!

For my latest blog, I have delved into the murky, detailed and sometimes confusing world of business plans – what’s required, why, and how etc.

The Office, the original and famous UK television sitcom, created, written and directed by Ricky Gervais and Stephen Merchant, about the day to day lives of office employees, taught us many valuable things. The main one surely being how not to run a business, albeit a fictional paper merchant company called Wernham Hogg!

A business plan is a crucial document for any start-up venture or indeed for any company that is seeking to secure funding to expand an existing business. A business plan describes the objectives, strategies, sales, marketing and financial forecasts of your business or venture. Without one, getting an investment or a loan from a bank is virtually impossible.

Now, back to The Office, as I’m sure most of you are aware, David Brent was the “dreaded” General Manager of the Slough Branch of Wernham Hogg. He thought he was some sort of business maverick, philanthropist and comedian, meanwhile, his staff thought he was petty and pompous. At the end of series two, his employers take the relatively easy decision to make him redundant after numerous failures to show he can improve the business and/or show the business has any strategy, instead relying on his self-perceived humour and wit to sustain the business.

Thankfully for Vectair, I’m no David Brent (although I have been known to cause the odd giggle in the Basingstoke Office).  I have written my fair share of business plans in my time (It comes with the territory of being a Finance Director, or “number bod” as Brent so eloquently puts it!). So here are some simple do’s and don’ts for implementing business plans.

Business Plans – the do’s

Do explain your business idea in simple terms – how it’ll work, why, where, who’ll make it work etc. You have intimate knowledge of your business but you have to be able to convey that knowledge to a third party.

Detail how you will achieve growth plans and projections – as well as a sales and profit projection (which is the sexy bit) also include a detailed cash flow projection so you can demonstrate your plan is both fundable and cash generating.

Inclusion of a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) – will show investors that you have considered both positive and negative influences on your business and understand why these exist and how they can be improved further, overcome, benefited from and tackled.

Set your targets – what exactly do you want the business to achieve? Show how progress to these targets can be measured.

Include Sensitivity Analysis – this shows an investor about how your business will perform if you fail to reach one or more key targets. Gives investors comfort that their investment will still be recoverable.

Professional advice – wherever possible, get input on your plan from your professional advisors. Accountants, lawyers et al are exposed to these documents on a frequent basis so they should be able to give you valuable input, particularly on structure and content.

Business Plans – the don’ts

Don’t over commit – be sensible and try and make the plan as realistic as possible. An overly ambitious business plan can adversely affect your credibility. If nothing else, it gives your investors/bankers something to metaphorically beat you with if you are failing to achieve your plan. If you have to really push the boundaries to make your business plan a success then it is usually a good indicator that it is not a good plan!

Don’t go for the “quick and dirty” plan – a business plan needs to be well researched, with input from all key players within an organisation. A half-hearted attempt to “sling some numbers together” to satisfy the bank can backfire. You need to ensure that enough time is allocated by all relevant staff to properly research and complete each section of the plan.

Don’t make silly assumptions – make sure that any assumptions you use are reasonable. Be conservative on the use of interest rates and exchange rates. Don’t make any outlandish claims on production efficiencies or the impact of sales and marketing plans. These all need to be supported with a well thought out strategy.

Don’t ignore advice – if somebody is telling you that something in your business plan is not going to work, don’t ignore them. Sometimes you can be too close to the business and you need somebody with a different perspective to see the faults. Explore it and hopefully, you can come up with a suitable resolution.

A well thought out business plan will be a vital tool for any business. Done properly, it can be a very worthwhile exercise that brings renewed focus to a business.

Hopefully, you have enjoyed my second blog. I heard on the grapevine that my first blog was one of the blogs with the most “likes” through our Facebook page (whatever that is!) out of all the Directors. So let’s see if we can do even better with this one!!

Now, I’d like to leave you with a favourite quote of mine from David Brent!

“This is the accounts department, the number bods. Do not be fooled by their job descriptions, they are absolutely mad, all of ’em.”

I could not agree more David.