| Why Write a Business Plan?
Research indicates that about 50% of businesses that start up will fail within 3 years - a majority of failures are due to being ill prepared to meet the changes that influence the course of a business - in other words, a lack of planning.
Many people think that a business plan is just a case of producing some financial projections. A few financial spreadsheets do not constitute a business plan. They do not take into account the Marketing, Personnel and Operational aspects, which are required to support the figures. Business planning is not just for Start-ups and small existing businesses are not exempt from the process either, even if done on a smaller scale. Firstly, they are more likely to be vulnerable to change and secondly, if they have aspirations for growth, they will need a plan to achieve it. The benefits of having a business plan are, principally, that it empowers managers, giving them a direction to follow, providing an on-going analysis of the state of the business, the marketplace and customers. Having a plan displays responsible leadership, gives confidence to the workforce that your feet are firmly on the ground and promotes a cohesive operating structure on which to sustain your business. It provides a benchmark by which performance can be measured and, if necessary, adjustments to strategy made. There are a number of reasons why you should write a business plan: | " | To provide information about your intentions to you and others | | " | To persuade a third party to provide resources or assistance | | " | To help strategic thinking so you know what you are trying to achieve and how to achieve it | | " | To set financial targets so you can forecast sales & control costs | | " | To raise money to invest in the business | | " | To provide a background against which to assess new ideas & changes | | " | To clarify & set goals | | " | To improve communications, efficiency & team effort | | " | To analyse the existing state of the business and what improvements might be achieved | How can a business plan help your business?
A business plan is a strategy document that defines where your business is going and how it intends to get there. It is usually a long-term vision and normally spans either 1, 3 or 5 years. A business plan is not just useful at critical moments in time. It has a role to play every day. From a business owner.s point of view, it is easy to get immersed in one subject - usually your favourite - and ignore the ones you find difficult or uninteresting. Therefore the business does not develop in a balanced way and probably does not realise its full potential in achieving results. The process involved in producing the plan is as valuable as the document it creates. When you draw up a business plan, you are forced to distil your ideas, rank your priorities and clarify your objectives.
You have to analyse the resources you have available - finance, people, facilities and premises - to see whether you have enough to help you reach your end goal. And if you don't, you have to work out how you will make up the shortfall. Also you have to research the markets you compete in, to ensure that customers will continue to want what you sell and keep a check on competitive activity. In short, it makes you focus on the future - and plan and be prepared for it - rather than just flying blind. Why it is necessary to write it down?
Even if you are the only person to ever see your business plan, you should still commit it to paper. | " | Firstly, it stops you kidding yourself. If it.s down in print you can't pretend, three months later, that it didn't exist. If your plan didn't work out then it is important to acknowledge it, assess what went wrong and see what changes you need to make. | | " | Secondly, by going through the process of writing it - you are forced to ask questions you could otherwise ignore or fudge your way through. | | " | Thirdly, it gets you focused on the important issues. It's easy to be distracted by new opportunities that may come along. Having a pre-determined plan allows you to compare any new ideas against your original objectives. Will they really help you achieve your goals? If not, you may want to adapt your strategy, focus on them later or ignore them altogether. | | " | Lastly, if you are ever asked to produce a business plan, having such a document immediately to hand will make you and your business look more credible. | |
