With HR increasingly having to show a bottom-line benefit for its initiatives, it is vital to know how to write a convincing business plan. And in HR’s bid to be seen as a credible business partner, being able to present your business opportunity in a way that the finance director and chief executive can relate to is essential.
Putting a more financially aware hat on early in your career will help to mark you out and ease your path up the HR career ladder. If you’re striking out on your own as an HR interim or consultant, meanwhile, it will provide a roadmap for running your company. It will help you to make informed decisions and chart your progress.
Writing a business plan isn’t difficult – you just need to understand the basic principles, components and pitfalls, and combine these with good literacy skills.
Where do I start?
Make sure that your project or venture is commercially viable. You need to demonstrate that it will either save money and/or time, or that it will increase efficiency and/or productivity. So much the better if there is a gap in the market for the service you intend to offer.
If you can’t justify it on this level, you won’t be able to build a business plan around it. Homework and research can form the key to this, so be prepared to go the extra mile to prove it. This may involve obtaining benchmarking data or some other tangible information relating to competitors or other organisations.
Show where the organisation currently sits in relation to competitors and obtain data to show how it will compare once your idea/initiative is implemented. Even if your idea isn’t new, demonstrating the positive benefits it has had at other organisations will help to build your case. Above all, be realistic – don’t massage data or figures to make a strong business case, as you’ll quickly lose credibility.
Cover the essentials
A comprehensive business plan must contain a clearly defined description of your business proposal and the business benefits it will bring. This needs to be backed up by solid market research, including data on your competitors. Include a risk analysis of implementing your proposal.
Make sure it details precisely what resources, staff and equipment or technology you need to go through with the idea. Be candid about how much it will cost, and include a prediction on when you will see a return on investment.
“You should be clear on how much capital you feel you will need and how you will get it,” says Robin Underhay, project manager at Business Enterprise Works, Coventry University Enterprises.
Finally, you will need a marketing plan, says Underhay. “When we are considering an application to join our business support program, we look for a marketing plan and a three-year financial forecast,” he says.
Find a blueprint
The best way to ensure that your business plan has all the component parts and looks professional is to find some examples.
Befriend someone in a department where business plans are part of daily working life, such as sales or marketing. As well as providing a shortcut guide to what they should look like, it will give you confidence and reassurance that what you are writing conforms to what is expected. Alternatively, there are online business resources that provide templates. Do seek advice from other people – this is very important, says Underhay.
“Don’t attempt to do everything alone, because there is support out there,” he advises.
Work in progress
A business plan should be treated as a living document that is periodically revisited, refreshed and refined to take account of changing business or market conditions.
Failing to keep pace with such developments and what is or isn’t working could ultimately stop your business opportunity in its tracks.
For more information
How to Write a Business Plan, by Brian Finch, Kogan Page, 2006, ISBN 074944553X
By Scott Beagrie. Courtesy of Personnel Today magazine. www.personneltoday.com
Second opinion on … writing a business plan
By Robin Underhay, project manager, Business Enterprise Works, Coventry University Enterprises
What advice would you give to any would-be business plan writer?
You must be able to write down what is in your head in a way that will be understood by people who may not have the knowledge that you have. If you want to raise money through venture capital or a bank loan, for example, often the biggest obstacle is not being able to sell yourself and your product effectively on paper.
What skills are required?
It sounds simple, but good literacy skills are really important. You have to be able to identify your product and its place in the market but, in our experience, the hardest part is writing it down. There is a misconception that business plans have to be pages and pages long, but they can be two sides of A4, so keep it simple. It is also important to tailor your business plan to the person you want to invest in it.
What is often overlooked?
Market research - which is incredible given the importance that potential investors place on it. We often find that individuals and companies are so focused on their idea that they presume everyone else will want to buy it. That is not the case. You need to make sure your idea is sellable, and that means researching your market.