Here’s Why Your Company Needs A Business Plan

It may be tempting to overlook the initial stage of devising a business plan. To an extent, a lot of entrepreneurs do try their luck at this method, which when you think about it, is a little bit reckless. As with most areas of your life, if you have a goal, you will need to create a plan to get there. You probably already have a few examples where with some ambition and self belief you made a plan to achieve something you wanted to work towards. Such as planning what you need to do to get a particular grade at college. For instance, you might create a study schedule, hire a tutor, attend study groups, and complete mock exams. Or perhaps you saved to buy a car outright. For this, you may have devised a budget and a timeline of how long it will take to build up your money pot. Along the way, you may have had to make sacrifices, and/or work overtime to bump up your savings account. For business, planning and setting goals is everything for providing you a clear path to follow.

What Is A Business Plan?

A business plan is a blueprint for your business. If you were opening a property developing business, you wouldn’t just buy any plot of land and start building the homes with rocks and mud on the landscape, you would need to assess and plan the following first;

• Apply research to support your business plan
• Source funding and investments
• Devise your sales and marketing strategy
• Create the company structure and management
• Plan the premises and equipment you are going to buy/rent 

Business plans are for all companies, not just for startups. Some entrepreneurs may treat a business plan as something they just need to check off their to-do list, and then proceed to cast it aside once they've completed it. When, in fact, a business plan is something you should refer to throughout the journey of your business. Also, because departments, processes, and technology change your business will need to undergo changes to supplement your business's growth, keep your brand fresh and relevant and to ensure it doesn't fall behind its competitors.

Test Your Idea

“By failing to prepare, you are preparing to fail.” 

― Benjamin Franklin

The first step to complete in your business plan is to test your business idea and its strength to work in the market you are thinking of targeting. You can do this by performing primary and secondary research to develop your own findings and assess data that is already available on the market you are hoping to be a part of. For instance, you could ask a pool of people to fill in surveys, or test your product and tell you their thoughts. You may ask them if it is something they would buy or use, and how much they think it costs. Within the research stage, you can expect that you may need to change your product or service in some way if you want to make a profit. However, as with the business plan, the research should, to a degree be ongoing also. This is to check that your business service, product, and brand are still relevant. To test any changes in buying behaviour in the market. And whether it's time to upgrade or change your business model to tap into a new market.

Financial Forecast

Once you have an idea that your product or service will work, you should establish whether or not you are likely to turn a profit. In consideration of your recurring overheads and one-off costs. And of course, you will want to know if and when you will break even. When you are creating your financial forecast, to make it as accurate as possible account for every expense you can think of, and source quotes for costs that you’re unsure of. Everything from staff wages to furniture, depending on your line of business, you might need a pharmacy fridge if you are thinking of opening your own medical practice/pharmacy to store medication. Or perhaps you need bulldozers and for construction. Other costs to consider are the technology most businesses can not do without such as PCs and servers. And of course the cost of renting the premises you have chosen along with the utility bills. Everything should be accounted for and then adapted over the coming months on your forecast as the cost of running your business is likely to change. Your projected financial estimates is also a way for you to consider whether you need to change your expenses such as reducing your outgoings, or equally whether you have room in the budget to spend more and buy better equipment.

Investments and Finance

This is the main reason a lot of businesses tend to write a business plan. Reason being, they know that just telling a banker their business idea isn’t enough to secure them a loan for their company. If you need to borrow money for your business, a professional business plan can help you do this. By providing a well thought out plan, you can demonstrate to the lender that you have an idea of action for your business.  This will give the lender the confidence that you are likely to succeed in your business quest. Which will increase your chances of your application being accepted.

Urgency And Direction 

“If you don't know where you are going,

you'll end up someplace else.” 

― Yogi Berra

A business plan denotes the course of action you need to take to reach your company milestones. Without one, your business has no direction, which means that tasks and processes may be elongated because there is no real end goal in sight. A sense of urgency from following a business plan will trigger you to better manage your time, to do the essential duties first and/or delegate work to other businesses that are better in a particular area of your business than are. For example, you could outsource your social media marketing.

Improve Your Business’s Chances Of Success 

A business plan overall shall improve your likelihood of victory. Research suggests that for startup businesses, in particular, 50% will fail after 4 years! Statistically, from the offset, the odds are stacked up against you, so it’s vital to preplan everything in your company to prevent failing.

“A goal without a plan is just a wish.” 

― Antoine de Saint-Exupéry

From the points discussed above it’s clear that whether you have just started a business or whether you have been established for some time, a business plan is what every owner should use to their advantage to strive for success.