Write A Better Business Plan – Part Two

business plan formulaA Better Business Plan – Your Business Formula

In part one we talked about perfecting your elevator pitch. Now it is time to bring out the calculator in a very gentle way.

The theory is that every business has a numerical, or formula to it. Confused? Don’t be, as we will clarify how this works.

Take this example

An estate agent is writing a better business plan. Their elevator speech is something like –

‘Owner run estate agency specialising in selling family homes in the popular areas of West Sussex and Surrey. Offices in Guildford and Horsham, we differentiate by concentrating on finding homes for families. We work to set criteria laid down by our clients and only source homes suitable for each family’

Their numerical summary, or formula reads something like this –

To get one sale it takes;

  • 5 viewings
  • Offer the property to 12 buyers
  • Average commission is £3k

So. The formula for achieving one sale is, 12 phone calls = 5 viewings = 1 sale = £3,000 income

Why Do This?

At some point you need to start justifying what you are saying. Anyone can produce a cash flow or profit & loss. The challenge is in supporting those figures.

Your business formula is how you achieve this.

By using your formula you can show how many sales it will take to reach your full year income. You can then show how many viewings and phone calls it will take.

The reality check is how achievable is it to make those calls, do you have the database, the contacts, the resource etc.

By having a formula you can start to see how your business works, you can also start to see where it may or may not make sense. It means you get spot the holes in your business plan, and write a better business plan much easier.

Support Your Business Plan Formula

Don’t focus on justifying the end figures. Don’t plan to achieve the end figures, plan on how you will feed the formula as everything will come from here.

In the estate agent case, plan on how you will make and achieve the phone calls as everything else stems from there.

If you have any questions or comments about this post then either add them using the reply button above, or contact us via the website.

By Dave Farmer

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