Have you created a Business Plan for your business?
Many people think they only need to write a Business Plan if they are seeking funding to set up or expand a business. However, it is far more than that.
A Business Plan demonstrates your goals for your business and gives you an understanding of how your business will operate and grow. You can use it to monitor progress and keep you ‘in check’ if you are falling behind on your aspirations. It’s a bit like having your very own accountability partner.
So let’s take a look at the 5 top reasons why you need to create that Business Plan.
1.To Map Out Your Business Future
Knowing what goals you want to achieve and writing them down with a clear process to achieve them gives you a far greater chance of success.
Case Study
An example of this is a study carried out with a group of Harvard Graduate students. Each were asked if they had set clear, written goals for their futures, as well as if they had made specific plans to transform their fantasies into realities.
The result of the study was only 3% of the students had written goals and plans to accomplish them, 13% had goals in their minds but hadn’t written them down and 84% had no goals set at all.
After 10 years, the same group of students were interviewed again and the conclusion of the study was totally astonishing.
The 13% of the class who had goals, but did not write them down, earned twice the amount of the 84% who had no goals at all.
The 3% who had written goals were earning, on average, 10 TIMES as much as the other 97% of the class combined.
And this is not a ‘one-off’ There have been other case studies with similar results, demonstrating that written goals with a clear strategy really do help you to focus and monitor performance much more accurately. Detailing the support and resources required to achieve your goals with a clear timeframe for each activity gives you a clear path to follow and early warnings if you are falling behind.
2.To Support Growth And Secure Funding
Although we said in the introduction that a Business Plan is far more than just fund seeking document, it is still the primary document that any potential investor will request (along with company statements/profits and loss statements) to make an informed decision. Armed with this information, the Investor will have a clear understanding of your business’ past and future.
When seeking investment it is important to clearly define the opportunity as investors will want to know:-
• Why it would be beneficial for them to invest in your business rather that leaving their money in a bank or investing in another business.
• What the unique selling proportion (USP) is for the business arising from the business.
• Why people will part from their money to your business.
A well written Business Plan can help you deliver these points to a prospective investor, which will help them feel confident in you and in the detail in which you have considered future circumstances.
The most critical component for them will be clear evidence of the business’s future ability to generate a satisfactory cash flows to meet debt obligations, while allowing the business to operate efficiently and make a profit.
3.To Develop A Marketing and Sales Strategy
Your Business Plan can also help to drive your marketing and sales as you are fully aware of the direction you wish to take your company. All marketing efforts and team members will know exactly what is expected. You can assign milestones to individuals and also use it to help management monitor their progress. It also becomes your sales force’s goal. The plan lays out targets in all major areas: sales, expense items, hiring positions and financing goals. These then become your performance goals.
If a goal is achieved early you can assess if this was down to individuals putting in a heroic effort or if you just overestimated. Alternatively, if you miss a milestone, you can learn from that too. Did we have the wrong strategy, did someone get lazy? All these finding can help streamline future activities.
4.To Help Manage Cash Flow
Careful management of cash flow is an essential requirement for all businesses. The reason that most businesses fail is not because they are unprofitable, but simply because they were unable to pay debts as they are due.
Knowing your financial outlay and income expectations, helps you to understand when you need to spend more frugally and when you can take on that extra member of staff or spend a little more on advertising.
This is particularly important if you run a business on credit i.e. you have an initial outlay before receiving payment from your customers. This can put a temporary strain on your financial position and therefore, knowing exactly when you will be ‘out of pocket’ helps you to hold onto other finances so your bills can still be paid on time.
5.To Support A Strategic Exit
Lastly, at some point, you will want to leave/sell your business. Whether it’s to move onto pastures new or to take retirement. With a clear, up-to-date Business Plan, it will be far easier to assess the value of your business and show potential buyers the opportunities available to them.
I have listed 5 reasons why you need to create a Business Plan but there are many more. Can you think of other benefits? We would love to here in the comments below.
Would you like help writing up your Business Plan? Then we are here to help. For more information or a quote, call Lyn on 01329 481202 or click on the ‘Request Call Back’ button below.
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