If you have a business or planning on operating one, then you need a business plan. I know; I put it out there very bluntly and straightforward. But let’s just face it, wouldn’t you need a road-map or a GPS to reach your destination if you had never been there before?
Even if you had, wouldn’t it be handy to still have one in case you make mistakes or forget something? As a map guides you from one point to another, so does a business plan when it comes to running a successful business. So, what is a business plan anyway and why is there so much emphasis on your business needing one?
What is a Business Plan?
You’ve probably heard it time and time again, “You need a business plan!” It is only obvious to first know what a business plan is to understand the reasons why you need one. A business plan is a blueprint of a business, what it should be, its future, and steps necessary to make it successful. It is an outline of what you intend for your business to grow revenue, to gain profits, and what your financial forecasts are. A business plan records what products or services you provide, the rates, how to market them, and who your target audience is. It also allows you to know whether your business is flourishing after your investments. A business plan is basically a written form of what you brainstormed when planning on operating a business and what you change as time goes.
Why You Need a Business Plan
- To remind you of the great ideas and goals you initially had: I’m sure when you decided to start a business, ideas started flowing through your mind. Imagine not writing any of those down. Wouldn’t you eventually forget some? Taking notes is a great way of preserving all your ideas and intended goals. A business plan also serves the same purpose. It is taking notes as you go along.
- To assist you in acting on what needs to be done: Writing your objectives down is just the beginning of the tunnel. It is crucial to keep up with what has been written and follow up with actions. Your business plan will help you focus on what needs to be done daily, weekly, monthly, and even annually.
- To show your accomplishments: It is very important to keep track of your accomplishments to avoid unnecessary repetitions. Your business plan gives you the opportunity to cross out all the goals you have accomplished and move on to the next one without worries.
- To help identify your company’s strengths and weaknesses: Knowing your strengths and weaknesses is VERY crucial! Having everything recorded and outlined will help you direct your focus to the right place at the right time. Your business plan will show your step by step actions, what worked, what didn’t work, and how it all happened. Knowing all these details will assist you in taking care of the problems. It’d help you focus on what worked and eliminate what did not work previously. Without a business plan, imagine remembering everything. Exactly; a chaotic mess…
- To make sure your team is on the same page: If you plan on working with a team such as sub-contractors, freelancers or employees, it would do you and your co-workers a great service by having a visual outline of what the business is about and how to go about implementing what needs to be done. It saves you time by cutting down time wasted on repeating yourself. It also gives an objective blueprint of everything to your co-workers, saving them time, and preventing frustration and misunderstandings.
- To help evaluate your market and competition: A business plan is not only written for the start of a business, it is also meant to keep up with all the short-term and long-term activities of the company. Having said that, it is very important to know what the market of your product/services is like and how to keep up with the trend. You should know what your target market needs because that will determine the success of your business. Knowing your competition is also a crucial aspect of your company’s success. What makes you stand out in the crowd? Keep an open eye and take notes.
- To establish a solid proof for financial support: If you want to receive grants or loans, having a business plan would be necessary to obtain financial support. Lenders or grant givers will usually NOT lend or grant your company money without you providing them an official business plan. It is usually a requirement. People want to know what their money is being used for and why they should give you the money. Having said that, if you are able to establish your business without taking loans, that may be better for you. The last thing you would want would be starting a business with debts.
- To give you a clear idea of what is going on and what needs to change: Since your business plan allows you to micromanage your company’s progress, it also enables you to macro-manage it. Micromanaging your business is controlling every detailed aspect of your company, whereas, macro-managing is when you deal with the bigger picture. So, having it all written down will keep everything neat and simple and allow you to stay aware of your company’s progress. Additionally, knowing what’s going on will help you identify what needs to be changed to reach your business milestones and goals.