This question is often asked by a lot of new and startup businesses. Along with asking if it is the best use of there time and what they will gain out of it. Our answer is simply yes.
A business plan should be an integral part of your new business and should be seen as a way of laying the business foundation. We would argue that even established businesses can benefit from changing and reviewing business plans on a yearly basis.
We would put the caveat however that for business plans to be of value they need to be a collaborative effort both between someone that has a hands-on operational role in your business with an expert in finance or business advisory. A business plan that has just been created by business advisory or finance will lack the realness and authenticity that someone can bring. One with the finance or business expert will likely lack reality and clarity in the data and financial statistics.
1. A business plan is essential for some businesses
If you plan to approach a financial institution for a loan, apply for a small business grant, pitch your business to investors, or enlist the support of a business partner, a business plan is required. Potential investors and supporters want to see the true potential of your business or business idea clearly laid out in hard facts and numbers. A business plan is the best, and generally, the only acceptable way to provide this information.
2. A business plan can provide clarity
In a business plan, there are some sections you will not be able to complete if you are not fully committed to a certain point. Business plans force you to eliminate the grey area because you have to write specific information down in black and white. Making tough decisions is now at either the start of the year or the start of the business will save a lot of time.
For example, if you have not decided on exactly what products you will sell at what price points, it will be very difficult for you to complete the Products and Services Section of your business plan. Having clarity in that section will allow for a targeted and strategic marketing plan.
3. A Business Plan Can Be a Reality Check
Writing a business plan is often the first real struggle for the small business owner who wants to launch a new venture, but doesn't want to consider that his or her business idea may be a bit flawed or is not yet fully developed. While this is an unwelcome and terrifying thought for an impassioned entrepreneur, identifying gaps early on in the process gives business owners a chance to shore up their research, test their ideas and take steps to make the business stronger and more viable. This may initially be a step back, but any and all further work can bolster the entrepreneur's chance of success before he or she invests time and money in a business that is likely to fail.
4. A Business Plan Can Give You New Ideas
Discovering new ideas, different approaches and fresh perspectives are some of the best things that can happen from the depths of the business planning process. Despite the sometimes negative reputation, a business plan isn't just a long, stiff and structured document.
In fact, an effective business plan is the opposite; it's a flexible, growing and dynamic tool that can help you think creatively and come up with new solutions for some of your toughest business challenges. This is especially true when you consider the Marketing Strategy Section. Here, as you create a blueprint for your marketing activities, creativity and fresh ideas are invaluable.
5. A Business Plan Creates an Action Plan
A business plan is a useful document for any small business owner. But when you use your business plan as a tool to help you outline action items, next steps, and future activities, you are creating a living, breathing document that not only outlines where you are and where you want to be but also gives you the directions you need to get there.
Going back to the original question of whether or not you really need a business plan, you may still be able to build a successful business without a plan, but it is most certainly easier to do with a well-constructed business plan in your hands.
Keep in mind that if you are using your plan as a true business planning tool, you don't have to wait until you have all of the answers to get started. You can create an outline of your plan now, filling in all of the information you have at this point, and then work on the blanks as you learn more about the market. This type of fluid and flexible document can be invaluable to a new business.
Need help with your business plan? We offer business startup consultancy, business strategy sessions as well as business planning to suit your business needs.
To find out how we can help you and your business book your free discovery call.