Operating your business without a business plan is like going to the grocery store hungry and without a list. You end up with a lot more than you need—a lot more than you even want—in your cart. And you’ve likely upset your budget for the week. A few such carefree adventures and your budget is out of balance for the month or even the year.
To help keep your business on track, you need a business plan. A business plan is an annual strategy exercise detailing the business’s financial and funding information, its products or services, competitive research and analysis, marketing plans, sales plans and projections, and information about the key people and their roles. No matter your business’s size or legal structure, the discipline of writing and maintaining a business plan brings structure and organization to the company and validation and motivation to the owners. This can be an essential exercise for the entrepreneurial spirit. But this tool can only work for your business if you dedicate the time to write a business plan and calendar it as an item for annual review and updates.
Structure and Organization
The mere exercise of writing out the details of your business and seeing them in print can show unnecessary duplication in some areas and gaps in others. With this information, you can reallocate resources as needed. Proactively addressing these structural issues before they manifest as problems keeps your business running smoothly and efficiently. Additionally, businesses need cash to survive. Planning and forecasting each year are critical to understanding how sales and expenses affect cash flow. Finally, a business plan can keep you on track with long-term goals when tempting and unanticipated opportunities arise.
Validation and Motivation
Over time, comparing your business plan forecasts with your results will provide the data you need to confirm business decisions—including the updates to the business plan itself. Whether the business is meeting its targets or falling short, having your “hands in the data” regularly means you can spot trends and take action. For example, consistently hitting sales targets may mean time to evaluate an expansion campaign or re-evaluate and trim the marketing budget. Consistently falling short of sales targets may mean the goals are too ambitious, or perhaps the sales team needs an additional resource. Working with new data allows you to take timely corrective measures. If the data reveals an issue, correcting a slight deviation in the course is much less overwhelming than being forced to re-chart the course. On the other hand, when the data reveals growth, striking while the iron is hot to capitalize on, that growth fuels the business with positive momentum.
Next Steps
Your business plan needs to cover a wide breadth of topics thoroughly. The Small Business Administration provides an excellent starting point for collecting the information and beginning the writing (or updating) process:
When you write or update a business plan, consider your audience. If the business plan is an internal document, you may handle the process yourself. Consider consulting with your business planning attorney and tax professional to gather and discuss some information. If the upcoming business needs include financing, additional investors or owners, or anything else that may consist of an external review of the business plan, the business plan must be well prepared, with information relevant to the decision process. You might hire a professional business plan writer to take your draft to the next level.
Companies that have written business plans perform better. Writing and maintaining a business plan can be challenging, but the benefits greatly exceed time and effort. While some business owners are comfortable writing their business plans, many business owners discover significant benefits after working with a business planning professional. We provide business planning services for the complete business lifecycle, including shaping initial ideas, deciding upon and implementing the proper legal structure, crafting a comprehensive business plan, and more. Call us today to discuss the following steps to getting your business plan underway.
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