Why You Need a Business Plan
People ask this question all the time, “Why do I need a business plan?”. People with a great amount of funding are the biggest offenders of failing to get a business plan. They somehow relate business plans to strictly a fund-raising tool. The reality is that a business plan is much more than that and every business should have one. A business plan is primarily a tool for understanding how your business is put together. You can use it to monitor progress and hold yourself accountable. It is also a key took for producing sales, recruiting and maintaining excellent employees, and enticing future investors.
Writing out your business plan truly forces you to review everything about your business and look at the big picture. Some of the things you will go over is: your value proposition, marketing plan, operations plan, staffing plan, and financial plan. For example, if your marketing plan projects 20,000 customers by the end of your first year and with the profit of 20,000 customers, you can afford to have three salespeople on staff, you are forced to ask: How can three salespeople generate 20,000 customers? This answer may lead you to realize that you need to re-look at the salary of a salesperson, or that you need to set-up different ways of lead-generation and sales such as forming business partnerships, setting up referral programs, or concentrating on bulk sales to large companies. Whatever the outcome, with a business plan you will know what you need to do and why in order to be successful.
When it comes to your operations plan, you will lay out major marketing and operational timelines. When you’re the business owner, the only person truly holding you accountable on a daily basis is you. So your plan needs to have a set-in-stone timeline in terms of marketing and operations. This way, your business plan becomes a calendar for making sure you stick to your time-line goals and is serves as a way to monitor your progress.
A business plan is how you drive the future. When you write, “We expect 20,000 customers by the end of year one,” it’s not a guess because you have a logistical plan with facts and statistics to back it up. It becomes your sales force’s goal to meet that number. Your business plan lays our target goals in all major areas: sales, hiring positions, financing goals, and expense items. Once laid out, your target goal becomes performance goals.
A well written business plan is great for attractive talent. When someone asks about your business, you can give them a summary of your plan which will give them an entire overview of your business. Their reactions will tell you about how quickly and thoroughly they can think through your business’ key issues. With the written record of your goals and a track record of how you’ve met them, you can get one hell of a message across to your audience: You understand your business and deliver the results you promise. Customers, employees, banks, and investors will all respond to that message.
To sum-up, viewing your business plan as a fund-raising tool is accurate but you will use it for so much more. Before your decide to skip your planning phase, please consider all of what a business plan holds for you and your business; especially the value it holds in determining your success.
Check out our other articles on Business Plans