The Importance of Having a Business Plan
Although a business plan is recommended for all businesses and entrepreneurs, the reality is that most small businesses only both when they need to acquire funding. Any investor or bank will require a well-researched and thorough business plan, with feasible financial forecasts and (if you’ve been running for a while) all of your existing profit and loss information.
However, a good business plan really should be something you produce even if you’re not actively looking for funding, as it can help you validate your business idea and bring into focus any challenges or difficulties you might encounter.
Similarly, a business plan can help you understand the finances of your business. Whether it’s through a complex Excel sheet with multiple years, forecasts and calculations, or a more informal list of how you expect to spend and make money. Often, entrepreneurs will be surprised by how much money they are actually going to need, and don’t discover this potentially critical problem until they sit down and complete a financial forecast. Just make sure you double check all of your data, particularly if you’re using a spreadsheet – there are numerous examples of businesses losing substantial sums of money due to a minor Excel error!
Moving away from the financial side of things, a business plan can also help you understand your market, policies and guidelines you need to follow, how you will market your product or services and, crucially, who you will market them to. The difference this can make to the overall success of your small business cannot be overstated, and it allows you to move forward with a clear plan of action. Having a roadmap and an understanding of how you will approach your business and any potential problems can be the difference between success and failure, particularly in competitive industries.
So, if you’re running a small business and you’ve never really sat down to complete a business plan, now might be the time to start. Even if you’ve been up and running for several months or years, it’s never too late to think about the future of your business. If you’re struggling, this simple guide will help you understand how to write a business plan and what you should include.