Everyone knows the importance of writing a business plan, especially when first starting out in business.
Here are six very specific reasons as to why a business plan is essential for your success:
A business plan allows you to look at your business or business idea objectively – especially if its written by a professional.
It allows you to see from the very start that your business can work and then youre heading in the right direction.
By getting the fundamentals written down first, such as how are you going to get clients and do the numbers add up, will save you a lot of time, effort and pain in the long term. By being clear on what you need to do and how you will do it – and in written form, as opposed to in your head or on the back of an envelope – will allow you clarify and be clear on your business idea before you even set out.
To make sure everyone is on the same page
A business plan gives everyone a sense of what you (and maybe others) are trying to achieve. The chances are that you will be working with or getting help from advisers, family, friends, employees etc – and as such a business plan communicates succinctly what you intend to do, how you intend to get there and what you are going to achieve!
To keep you on track
A business plan will give you a clear direction, which can help eliminate stress. As a business owner, you will already know that youre often juggling lots of roles – everything from director to bookkeeper to maybe even the cleaner! More often than not youll be working in the business as opposed to on the business. A business plan that details your mission, that sets realistic goals can help keep you focused and on track. It also allows you to take a step back and reappraise your overall strategy and objectives.
To get you to focus on your customers
In my experience the key to any successful business is cash flow and clients – more so the latter, as without any clients you just have a very expensive hobby! With a business plan it gets you to clarify and identity the answers to key questions, such as "Who are my clients?" "What do they really want?" and "How will I reach my intended client base?"
To raise finance
An obvious one, but even if youre borrowing funds from family and friends, you still need to communicate your business idea in a clear, compelling and professional format. Similarly your business plan is your passport to gaining finance, and so its vital to present your vision, idea or existing business in the best light possible.
Often this is forgotten by business owners – but given the current economic climate, you simply must provide a credible and viable business plan if youre going to approach your bank for funding. Potential investors will look at the strength of your plan when reaching a decision. So you need to not only sell your company, but yourself too! A professionally written business plan will do this for you.
Did you know that a study by Babson College found that start-ups with a business plan raised twice as much capital as those without a business plan within the first 12 months.
The single most important reason...
However, I believe the single most important reason you need to write a business plan, is that the process forces you to think about every aspect of running a business. By writing a business plan it encourages you to ask yourself questions that you may not have considered.
Very often when I write a business plan for a client, we will discover aspects of running the business that they simply wont have thought about, such as legal implications, insurance, marketing, or in fact whether the business will be profitable. Without a plan, you are making it up as you go along!
Andrew Ludlam is the owner of The Business Plan Writer and has been a business plan consultant
since 2004, providing professional business plan writing services for startups and businesses across the UK. For more information and free resources visit www.thebusinessplanwriter.co.uk
The Business Plan Writer