7 Good Reasons To Have A Business Plan
Many entrepreneurs feel that they can run their business by “flying by the seat of their pants”, so to speak. While that can be done and is exciting, almost 90% of startups never see a second year, and many small businesses tend to run sluggishly all because their owners never invested in a business plan. Well here are 7 good reasons why you should:
1. Help you figure out clearly where your business is headed and what critical steps you need to take.
2. You need to perform research to get the start up costs for your new business or for the growth you’re planning for the next phase of your existing business.
3. Give you a sales document that you can use to raise capital at the banks or lending institutions.
4. With the right financial analysis software tools, you can vary your business assumptions and see the financial results without spending time or money.
5. The plan is a map by which to run the business and to checkpoint your performance and see whether you’re on course and on schedule.
6. All your key employees can refer to the business plan so that everyone is always on the same page.
7. By using it as a guide and by varying the behavior of the business or by changing the plan as needed, you can prevent yourself from repeating the same mistakes.
Filed under: Management
If you are relating your comment to those who are in business without a business plan, then, yes, your 7 reasons why a plan is necessary are good ones to motivate someone to do a business plan. Of course, if they are profitable without a plan, I’m not so sure they would be motivated to do so.
I “love” the term used in the UK that relates to your point #7. They call it Business Plan Management and, to me, that puts a whole different light on how to use the plan that is different from calling it a “guide.”
But, if your are planning to suggest this for a start-up business, then you left off the most important aspect of doing a business plan. It is two-fold. One is to determine if there is any chanc the business will “fly” the way the entrepreneur thinks(?) it coulds, shoulda, woulda be.
The second is to look at the genre of what of what was the idea and see if by changing the focus (reason, market, size, products or services) and see where that goes.
Lastly, and it goes for both start-ups and existing businesses, when one goes to do a plan, even though it is said failing to plan is planning to fail, there is the fear that if one does a plan and does not do as it was estimated, one would be a failure . . . so, rather than making the goals or a business plan in tangible form where others (including one’s own conscience) can see that one did not do as planned, only one’s conscience has to know this.
So, yes, there may be 7 reasons why to do a plan . . . the “fear of failing” what one “promised” in their plan will negate the 7 reasons.
I’ve known several small business making money, some profitable, that never had an articulated business plan - they had one by default, of course. However, those firms, without a plan, all had a common denominator: they were stuck at a level of growth. They were not growing at the same rate that the market was, and they did not know it. While driving without a map may be fun and an adventure, building a business without a map may yield something more than an “adventure.”
The adventure a business person should never miss is the process of planning - its yield is far greater than its effort.