A business plan helps leaders to step back and think carefully about the bigger picture.

This includes looking at the company's strengths and weaknesses, as well as the financial situation and resources available. It also encourages you to consider the long-term vision for your business: what does success look like?

A five-year business plan makes your business work more effectively and allows you to continually meet expectations. Don’t assume that business plans are just for startups or companies applying for loans either – they’re valuable for every business.

There are plenty of benefits when it comes to five-year plans.

Identify a long-term goal

A business plan forces you to settle on a direction and goal for your business, which is essential if you’re easily distracted by trends or new projects.

Once you’ve identified the direction you want to take, you’ll have a better idea of how strategically aligned your business is. Does your day-to-day activity match up with what you want to achieve?

Set priorities

You can’t do everything at once. A business plan ensures your time, effort and resources are best spent. When thinking about how to write a strategic plan, ensure you choose which tasks to prioritise and which tasks aren’t as essential as part of the process.

Once you understand your priorities, you can set objectives for the company based on these priorities.

Calculate your resources

Putting together a five-year business plan for a company helps to map out what you'll need in the next few years. While circumstances inevitably change over time, you’ll know roughly what resource is required to get projects successfully out of the door.

Spot potential problems

A business plan encourages you to take a critical look at the next steps you’ll take. That makes them useful for spotting any potential problems that could derail the business.

For example, you might find your financial projections are unrealistic or you haven’t factored in the budget you need for extra developers. It’s better to realise this now, rather than suddenly facing a blocker a year down the line.

There are seven main components of a business plan.

Executive summary

The executive summary provides an overview of your plan and business. Although it comes first, it’s best to write it last when you have a clearer idea of what you want to achieve.

Try to keep the executive summary to a single page. It should be a concise, accessible way for employees, advisers and investors to understand your business plan.

Company mission statement

You’re planning for your company’s future, so what better time to remind yourself of the reason why you started? The goals you set in your business plan should ultimately relate back to your mission statement.

SWOT analysis

A SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis lets you analyse your company’s capabilities.

By identifying your strengths, you’ll know which areas of the business you can build on and which areas need improvement before you can progress.

For example, your strengths might be in your operational capabilities. You have an efficient service that customers rate highly and there’s plenty of opportunity for growth. However, your weaknesses are that your marketing team is inexperienced and your internet presence is minimal.

As a result of this SWOT analysis, your next steps could be:

• Hire a marketing manager with experience in your sector
• Research the resources needed to build a competitive online presence
• Strengthen your leadership team to prepare for growth

Setting goals

Having long-term goals is essential for businesses. If you don’t have an ambitious goal that excites you and drives your team forward, your business will stagnate.

The first step is to identify your five-year or long-term goals.

• Keep goals clear, simple and specific
• Think big – your long-term goals shouldn’t be something you can achieve in six months
• Make sure your goals tie back to your mission statement

Try to make your goals as specific as possible. For example, if it’s to increase your share of the market, ask yourself: by how much? The more specific you can be, the easier it will be to measure how much progress you’re making towards them.

Customer, industry and competitor analysis

By this point in your business plan, you will have established your strengths, areas for improvement and goals. But a business plan shouldn’t just focus on your company – you need to look at external factors that could affect you too.

Customer analysis

This component of your business plan looks at who your target customers are and where you’ll focus your marketing efforts. The more you know about your prospective customers, the higher your return on investment will be.

Even if you’ve been running your business for a while, bear in mind that the market is constantly changing and customers’ demands around speed and quality of service is increasing. Will your current marketing methods still be effective in five years? What other ways could you attract new customers?

Industry analysis

This section doesn’t have to be an exhaustive report on your market. But it is important to look at where it is likely to go in the future.

You need to ensure the market is growing and there are future opportunities in your current sector. If not, you might need to diversify your offering and look at new opportunities you could take.

Competitor analysis

Define your main competitors and list their strengths and weaknesses. Online reviews can help to give you a customer’s perspective.

This analysis determines your current competitive advantage and any areas you could build on.

Examples of competitor analysis questions include:

• What markets or market segments do your competitors work in?
• Why do customers buy from them?
• Is there a service that customers want from your competition that they don’t offer?

Summary of your team

Even with a comprehensive business plan in place for your company, you won’t achieve your goals if you don’t have the right people on board.

Provide a summary of your team, including brief bios of key members. Look in particular at their experience and skills to see where you might have gaps.

Can you accomplish your goals with your current team? Does your team have the relevant industry experience and background?

Financial projections

Financial projections are an essential component of your business plan because they help you decide the best opportunity to pursue. If you don’t analyse your future finances, you risk spending a year on a project and then running out of money.

This section will also help you clarify your goals and ensure they’re grounded in financial knowledge. For example, if your goal is to increase the number of first-time customers, look at how much it’ll cost you to reach your goal each month.

Try to roughly outline your annual projections over the next five years, but be prepared to come back to this section regularly. You can update it each month as you have more clarity and insight about what your business is spending.

Five-year plans rarely stay the same. You’ll need to continually reassess the components of your business plan in response to changing market conditions, staff and competition.

What matters most is how you adapt to unexpected challenges. If something comes up, be flexible and prepared to rework your plan. Don’t tie yourself to a goal if it’s no longer in your company’s best interests.

Fourth-generation family business H.Forman & Son faced a series of disasters which turned their plans upside down. The first was a factory fire, then a local river flooded and left the building under a metre of water. The factory had to be rebuilt near the top of a hill, with extra fire safety precautions and three years’ business interruption insurance.

During tough times, owner Lance Forman recommends revisiting your business plan and deciding where your company goes next. Focusing on the future keeps him motivated, but he emphasises that business owners should be prepared for change.