Why write a business plan
Many people ask us why they should write a business plan at all. The answer to this question can be short or long depending on where you are with your business venture. If you are just starting out then the chances are that your bank has requested it. If you have an existing business perhaps you are looking to expand and need some funding and again your bank needs it.
If you take any business degree course then this is one of the first documents that is developed and it's sad to see that for those looking at starting their first business just believe they can get a loan without proving to a bank that their money is safe and be repaid. But if you have skipped this step but now need to develop business plans for your organisation then here are the top 5 reasons why every business no matter how old or young should develop a robust plan for their business.
1: More companies stay in business
Many research and studies that have been undertaken by organisations such as businesslink and many banks show that companies with a business plan not only stay in business for much longer but they also generate much higher sales growth and profits than those organisations that don't have a formal plan. This makes sense because their is a profit path to follow. Many new business owner just don't understand just how many sales at their require profit percentage they need to make to not just cover their costs but create a profit that will improve their lifestyle.
2. You can understand what you need to do
Having no goals or having some things just in your head that may be forgotten is a recipe for disaster. The best place for ideas is to have them written down on paper. This simple log will enable you to see what you had planned to get you to achieve your overall objectives. If you don't know how you are going to get new customers, ship products or beat your competitors then you are unlikely to succeed in the longer term. Your plan will enable you to analyse your business before you spend anything to start or launch new products.
3. You can allocate finite resources better
Most businesses have finite resource both in terms of cash available and the people to manage and run the organisation and there are only so many things that can be achieved in 24 hours. So therefore a process of prioritisation must take place for all the objectives you have developed. Many experts suggest that a company can only concentrate on perhaps 6 or 7 key aims in any one year so pair down what's required and allocate people to achieve each task with clear goals to know that each objective has been developed and actioned.
4. You will understand your finances
Preparing a financial plan together with marketing are the areas we get most questions about. Most entrepreneurs have limited knowledge in both these areas but these are key to profitable success. If you don't have the skills in these areas then it's best to find someone who has or seek help from some of the specialist business planning organisations that can be found online. As banks see hundreds of business plans each month they know what is required in financial statements and will not tolerate having forecasts that simply don't add up, either literally or in principle.
5. Everyone will be aware of your plans
Communication for any business is key so once your plan is finished you'll be able to share it with your staff, bank manager and other interested parties that need to know the direction the company is going. This is important to pull everyone into the same direction to be able to work on the objectives of the organisation and know what the end result is forecasted to be.
There are the 5 key areas on why you should write a business plan in the first place. Actually preparing your own is the next part of the journey. We have plenty of help on this site so have a look around as you'll find everything required here.