If you run a small business planning to grow, your business plan needs to balance your ambition wth your ability to fund it, call Sightpath on 0845 468 2020 for help writing a business plan that's in balance and fit for purpose.
As your business grows, you will need to spend cash on the acquisition and retention of more customers and on the assets and resources to service them. This is shown by the red outflow of cash in our 'heart' of business success model that we use to help with business planning. When customers and capacity are in balance, there will be a net inflow of cash into the business, as depicted by the green line in the 'heart' of business success.
As a business grows the 'heart' will often tip out of balance as more cash is spent on capacity than is earned from customers and the business will need access to capital to see it through this period.
Part of the business planning process is to work out the level of funding required for each stage of growth. Statistics show there is a high rate of failure for a small business planning to grow because it often runs out of cash before the heart swings back into balance. Make sure you are working to a balanced business plan. This is covered in detail in the book, The Heart of Business Success - How to overcome the Catch-22s of growing your business by Robert Copping, the founder of Sightpath.
Sightpath provides Business Plan writing services to small businesses aiming to grow or seeking finance. A Sightpath business plan writer will use our unique business modelling system to calculate your funding requirements before writing your business plan. Call 0845 468 2020 to discuss the growth opportunities for your business.
Reasons for a business plan
There are 2 main reasons for business planning:
- Studies show that your business is more likely to achieve greater success if it follows a well-structured business plan. It can help prevent your business getting out of balance as you grow; and it helps to create focus, motivation, confidence and success.
- When your business requires access to external funding or investment you will need a robust business plan to give due confidence to the lender or investor.
A business plan defines where the business is going and how it intends to get there.
FREE e-book: 7 Mistakes to Avoid in Your Business Plan
How to create a business plan
Any business can be broken into just 3 elements:
- Winning it
- Doing it
- Getting paid for it
There’s always a lag between winning it, doing it and getting paid for it, which creates a cash requirement that needs to be funded.
If you want to grow you have to spend more on winning it and then doing it before you get paid; so you’ll have a growing cash requirement.
And the steeper your desired Growth Gradient, the deeper your Cash Requirement.
The good news is that for a given level of growth the cash requirement is predictable.
The bad news is that it’s difficult to calculate, so it often doesn’t get done.
Yet it’s one of the most significant outcomes of your business planning – the Cash Requirement needed to fund your Growth Gradient and how you intend to fund it.
If you can’t fund it, you have to scale back your Growth Gradient.
Companies can show healthy profits and still go bust – it’s cash that counts.
The right Growth Gradient is one that enables you to balance the scale of your ambition and your funding by always keeping in balance the 3 critical ‘C’s: Customers, Capacity and Cash.
A cashflow problem is actually an unforeseen cash requirement.
The business plan must show that you can cover your Cash Requirement at every point of your growth.
When it comes to business planning, there’s no right answer, because everyone’s circumstances and attitude are different.
Whatever the level of ambition you choose – to be successful – you have to keep the 3 critical ‘C’s in balance as you grow.
This is covered in detail in the book, The Heart of Business Success - How to overcome the Catch-22s of growing your business by Robert Copping, the founder of Sightpath.
How does Sightpath create a business plan?
You tell us about your business (or your business idea) – i.e. your customers and your products or services and about your ambitions for the business.
We’ll model it using our unique business planning system to generate a business plan with a growth gradient that best suits your specific situation.
We use a 3-stage process for Business Planning:
- Model it – Create a model of the business that links the 3 critical ‘C’s: Customers, Capacity and Cash. At this stage there is no scale to the plan.
- Balance it – Balance the scale of your ambition and funding to specify a Strategic Objective(s) and generate a Growth Gradient
- Sense check it – Check the plan makes sense compared with the scale of the market and conduct a Sensitivity Analysis.
Our system will calculate the maximum Cash Requirement to reach your ambitions and we’ll help you decide how best to cover it.
We will process all the numbers you need for your business plan – from Customers through to Cash flow. Our process works on marketing and finance as part of the same process.
This is the basis of the Sightpath service. You have no obligation to take any of our other services.
However, once you’ve developed your business plan you will have to implement it. That usually means attracting a growing number of customers and we offer a monthly marketing service to win more business and we'll review the progress of your plan.
Save yourself time, money and frustration with a Sightpath Business Plan, call 0845 468 2020