Why you need a business plan

A good business plan helps you plan where you want to go; your future end destination illuminated by the milestones along the way. At any time, a quick glance at your business plan lets you determine if you’re on track to achieve your goals, or whether you might have to steer the boat back on course. 

Your business may feel like it’s getting somewhere – but is it where you’d choose, or is there a better way? A business plan helps you steer towards a clear destination by giving you a blueprint for future growth. 

A business plan also identifies areas of your business you might have previously overlooked that need attention, or areas that present an opportunity to implement something new or different. 

Completing a business plan will help you think through each aspect of your proposed business and transform your ideas into practical steps that you can follow. The process will sharpen your ideas which will give clarity to your purpose and concept.

A business plan provides a focus and motivation for you and your staff. It’ll help you share your vision for the business, turn that vision into action, and measure your progress along the way.

Your business plan demonstrates confidence by showing you’ve thought through your ideas and translated them into achievable steps. 

You, along with your management team and staff, will be the main users of your business plan and financial forecasts. But the information will also be useful to professionals who provide you with business services. 

For example, a business plan will give your bank the information they need when:

• Setting up your cash management
• Setting up funding and investment services
• Considering applications for finance. 

Your accountant will often help you prepare your business plan (particularly the financial statements), but they’ll also use the information you provide in the plan to offer further advice.

Your lawyer can provide advice on the way you structure your business and enter agreements (such as leases) with other parties. Business plans and financial forecasts give the background information your lawyer needs. 

A business plan is also vital for showing investors what your business is about and how you plan to make them money.

Before you launch into writing your plan, consider some of these useful tips. 

If you’ve already made some sales, you should have financial statements that include profit figures, sales figures, and business costs.

It’s easy to be overly optimistic about new ideas – but beware of rose-tinted glasses. Think about the targets you’ve set and whether they’re appropriate at this stage in your business’ life cycle.

Growth that is too rapid or too slow could cause difficulties.

Your business plan should recognise that things like markets, consumer needs, trends, technology, products, and services are constantly evolving. Can you show how your business will keep up?

Your business plan will naturally focus on the year ahead. But you should also consider issues that will affect your business as far ahead as five years’ time. That way, you can put a plan in place that will set your business up for future success.

Your business plan can take any shape, but it can be helpful to work to a template. The key is to keep your plan short, simple, and practical, so it’s easy to implement. Otherwise, it’ll end up gathering dust on a shelf.