Why You Need a Current Business Plan
Some Business Owners think you don’t need a Business Plan unless you’re trying to borrow money. Of course, it’s true that you do need a good plan if you intend to approach a lender-whether a banker, a venture capital company or any number of other sources-for start-up capital or to fund the growth strategy in your Business Plan.
A well-written business plan, probably at least 3 years, will be essential to help convince investors or lenders to finance your business.
The Financial Projections in your plan must clearly show them how much capital you will need to raise, and when and why you will require it.
Your first business plan will require a great deal of thought and you will need to ask yourself a lot of questions and make sure you have the answers. Because having the answers to these questions will be critical to your growth strategy and your chances of getting funding achieving your plan.
Note: Covid-19 Impact. If your business is in the growth or mature phase and still experiencing the impact of Covid-19 you might prefer to limit your plan to the next 12 months as you need to stay focussed on the immediate future.
For most businesses, depending on your industry and products or services your priorities would be Cash Management and Forecasting, Financial Management, Supply Chain, and the impact of the pandemic on your Customers.
So, Why Do You Need A Business Plan?
Your Business Plan is much more than a pitch for financing; it’s a guide to help you define, monitor and achieve your business goals.
Your business plan is your roadmap to manage and operate your business, and to refer to for direction in times of doubt.
It should clearly lay out the long-term milestones that are most important to the ongoing success of your business. Without a clear view of those milestones, you may shift your short-term strategies without fully considering the long-term impact.
Writing your business plan is an opportunity to carefully think through every step of starting your company, so that you can prepare in advance for growth and success.
It reduces the risk of pursuing the wrong opportunity. Will people want your product, and will they be prepared to pay a fair price for it?
As you research and prepare your plan, you’ll find weak spots in your business idea or growth plan that you’ll be able to address.
The time you spend making your business plan thorough and accurate and keeping it up to date, is an investment that will pay big dividends in the medium to long term.
Your Industry, Your Competitors and Customers:
You will need to explain Your Industry, your Competitors and Customers:
- What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your products & services?
- It forces you to analyse the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages.
- Also, to get a better understanding of your customers. Why do they buy, when they buy? What need are you fulfilling for them? If you are a Start-up business, getting a detailed understanding of your customers serves as a feasibility study for the success of your venture.
- Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product or service and running your business.
Which geographic locations are you planning to serve? Depending on the Nature of your product or service, or whether your business is online or bricks and mortar, covering rural areas or selling interstate will add complexity, and if you plan to sell Internationally there will be a lot of additional factors to take into account.
By going through the process of putting together your plan you can decide whether your great idea is really worth your time, effort and investment.
Writing Your Marketing Plan
Once you have defined your Industry and researched your competitors and customer you will be ready to write your Marketing Plan, one of the key sections of your business plan. Your marketing plan will need to explain:
- How you are going to reach your customers.
- How you will convince them to buy.
- How you will retain them as customers
- What price will you charge for your products or services, and
- What is your advertising and marketing budget?
A well-documented marketing plan is essential to the growth of your business.
Your Business Plan Is Your Tool To Manage Your Business
So, in fact, a business plan is a tool for understanding how your business is put together and how it will operate. You can use it to monitor ongoing progress, and to hold yourself accountable and control the business’s fate.
Writing your plan forces you to review all the elements that make up your final strategy and how they will all fit together:
- Your Value Proposition,
- Products & Pricing Strategy,
- Business Growth Strategy,
- Financial Management and Control Process, and
- Your Business Exit Strategy
They are all interrelated pieces of the puzzle that fit together to form your plan.
As part of your marketing and operational plans, you’ll define major milestones. When you’re the founder, the only person holding you accountable to achieve those results on a daily basis is you!
So your plan becomes a baseline for monitoring your progress. But even more than a tool for after-the-fact learning, a plan is how you will drive the future.
Your plan lays out targets in all major areas of your business: sales, marketing, pricing, costs of production or purchase, expense items, hiring positions, capital expenditure and your financing goals.
Once defined, the targets become measurable key performance goals and indicators. I.e. the KPI’s you will measure your results against every month.
Your Business Plan Will Attract the Right People
And of course, your plan is a sales and recruiting tool for courting key employees. To attract and retain top quality talent your business plan must inspire employees and management, to convince them that your idea is sound and that the business is poised to achieve its strategic goals.
And of course, a well-written plan is great for attracting talent. When a prospect asks to understand your business, you can hand them a plan that gives them an entire overview.
Their reactions tell you something about how quickly and thoroughly they can think through your business’s key issues.
Conclusion
So, viewing your plan as a fund-raising tool is just the beginning of the story. You’ll use the plan for so much more.
Documenting your goals coupled with a track record of delivering against those goals sends a message loud and clear to all potential stakeholders:
“You understand your business and can deliver the results you promised”
Great employees will respond to that message-as will banks and investors the next time you need to raise money.
Your Next Step
If you would like to get more details about how to create your Customised Business Plan to build and grow your business, you can book a Free 20 minute strategy call with me personally, so we can discuss whether it is a good fit for you and your business at this time.
You will receive an email confirmation and a reminder from my booking system prior to the meeting.
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