Why you need a business plan
A business plan is a document that not only helps you get your business up and running, it also helps keep you on track throughout your business’ lifespan. Without a business plan, you’re really just winging it and, unless you have oodles of beginner’s luck, it’s not likely to be a recipe for success.
What are the benefits of creating a plan for your business?
There have been many successful businesses established without a business plan; however, there are nine key benefits that are hard to look past if you’re serious about your business’ sustenance and growth. Take luck out of the equation by planning ahead and make sure your entrepreneurial pursuits aren’t in vain.
It’s a point of reference
First and foremost, your business plan is a point of reference. It is a tool to track your business performance and project into the future. Without one, you have no indication of progress. Your business plan is the measuring stick for your success. Business plans can and should grow and change with the business; however, without one at all, there’s nothing to show that growth and change.
It helps you look at the bigger picture
A business plan allows you to step back from the granular detail and see your business as a whole. How does each element work together? Can you see long-term growth potential, or does the model need tweaking in order to scale? Have you thought about the costs involved, and can you afford to sustain those payments in the long term? By getting it all out on paper, a business plan enables you to see your business from a new perspective, which is always important if business development is on the menu.
It allows you to pinpoint your strategy
A business is only as good as its strategy. Spending time thinking about your business niche, who’s in your target audience, what they want and how they want it, allows you to better develop your business towards a profitable outcome. Your true target audience could be completely different to who you think they are but you’ll never know until you dig deep into research. Then, from that research, you can piece together the best strategy for the outcomes you want to achieve.
It compels you to identify business goals and milestones
Your business plan will force you to look to the future and really nut out what you want to achieve. As an entrepreneur, you should be setting both long- and short-term goals for your business that are realistic but challenging enough that you’ll feel a sense of achievement when they are reached. If you’re going it alone, this gives you a great opportunity to project forward and think about when you’d like to hire your first staff member or, if you’re looking to build yourself a more passive income, perhaps you’ll set yourself a deadline by which to automate an element of your business. No matter what your goals, setting them out and writing them down gives you a point of reference and holds you accountable to achieve them.
It establishes responsibility
Identifying who will take responsibility for which tasks is really important for any business as it avoids the horrible feeling you get when you realise you missed an opportunity because he thought she was doing it and she thought he was. By writing down each person’s role and responsibility within the business and your expectations of them, you hold them accountable for their actions (or, in some cases, the lack thereof) and can maximise your productivity as a result. If you’re the one and only staff member in your business, be the man or woman of many hats but make sure you prioritise your tasks to best reach your business goals.
It illuminates priorities
As much as we hate to admit it, no one is Superman or Wonder Woman. We simply can’t do everything. Your business plan will help you keep track of what’s most important for the business and guide you to make decisions (sometimes hard ones) with your goals and milestones in mind.
It enables you to manage and optimise productivity
By putting down the key metrics by which you’ll measure the success of both your business and your staff, you’ll be able to look back and make sound assessments of the work you are doing and its impact on the business as a whole.
It assists you in managing risk
No business plan should remain the same from inception. Change is inevitable, but from change arises risk. By regularly reviewing your business plan, you can plot and manage change, which also allows you to mitigate any potential risk brought on by that change. By staying up to date with the latest developments in your industry and finding ways to implement them in your business model, you not only stay relevant, you set your business up for a more secure future.
It fine tunes cash flow administration
You may have a simple business plan that enables you to just watch the profits as they (hopefully!) stream in; however, whenever you introduce another element, like distribution, staff, manufacturing or even business loans, cash flow can become complex. It’s smart to put the puzzle together sooner rather than later to avoid debts building up due to poor planning or management. Planning out your cash flow will also help you identify existing or potential problems and find solutions before they become detrimental to the business.
It helps measure strategic alignment
What is strategic alignment? Simply put, it’s when your day-to-day business tactics are in line with your business strategy. It’s, more or less, a way to make sure your business and your brand make sense to your consumers, not just in what you sell but how you sell it. Planning out everyday operations for your business is a great way to make sure that your business values, strategy and output all align so as not to confuse your target audience.
While these are just ten of the benefits of a considered and detailed business plan, they alone show just how instrumental planning is for business’ success. If you’re having trouble planning your business, stay tuned for our upcoming blog on how to write a business plan.