Whether you are starting a small business or looking to expand a current one, having a business plan can be the key to your success. It allows you to communicate the direction of your business and helps you to achieve the goals of your business.
A business plan forces you to analyse everything about your business at once. Such as your value proposition, marketing assumptions, operations plan, financial plan and staffing plan. Whilst analysing your business, ultimately you are monitoring the progress of you and the business.
You learn from your business plan and therefore what you learn will help you do a better job in the future.
The pros definitely outweigh the cons. Many things can go wrong if you don’t take the time to plan. Common issues businesses face who do not have a business plan include:
- running out of cash,
- missing sales projections,
- losing customers because the quality of service falls short,
- overwhelmed by too many options because you are not in touch with your business mission and values
You could go bankrupt due to not having a rational business plan to guide you.
Below are five reasons why it is important to have a business plan:
1. Communicate a course of action
A business plan helps you evaluate where you are at and allows you to assess what future opportunities may arise for your business.
This allows you to plan a course of action. Having a course of action helps to prioritise what key activities a business needs to focus on to have success.
2. Forecast the future
By having a business plan, you can understand your business better.
A business plan can help you set specific goals and objectives and gives you an understanding of the resources required to achieve those goals. Therefore, understanding your business and the market it is in will ensure your long-term success.
3. Better understand the market
A business plan includes a detailed outline of the demographics, economics and behaviours of your target market.
When you have a better understanding of who you are trying to target it will be easier for your business to set goals and objectives to succeed. It will also give you an achievable vision on what direction your business needs to be heading in.
4. Secure funding
Often businesses will need to seek external funding. If you are seeking finance for your business, you’ll need to show banks and investors why they should invest in your business.
Lenders and investors need to be confident that giving their time and money to your business, will be profitable for them. Therefore, having a business plan shows them that you are serious about your business and allows them to understand your businesses mission and values, where your business is heading in the future and gives them a detailed plan of your predicted profits.
5. Keep everyone on the same page
Making sure your staff understands your businesses vision and know what you are trying to achieve is the basic element to success.
Communicating this to them through a business plan, supplies them with a vital source of information which will them help them with the choices they make regarding what to prioritise, opportunities and strategies.
It is important to note that as a business develops, the business plan will change to fit the modifications of the business.
Do you need help developing your business plan? We have business advisory services available where we review your business and help you get on the right track with your business goals. You can find out more info here.