By Rob Warlow
The humble Business Plan is back. Go and see your bank today for business finance and the first thing they will ask for is a Business Plan. During the credit boom less emphasis was placed on having a document which clearly set out a path for your business but now we’re being asked to go back to basics.
Perhaps you’re not convinced that the time and effort needed in writing a Business Plan is worth it. If you need persuading here are the benefits you’ll gain by putting time aside to write your Business Plan.
1.When approaching your bank for finance, no matter how good a communicator you are, it can be difficult to convey your vision as successfully as you can in a well crafted Business Plan. A focused Plan sends a clear message as to what you want to achieve.
2.A Business Plan will help convince you and the bank of the feasibility and viability of your project. There's nothing like being forced to consider all the facts to clarify the key issues and risks you’ll be facing. The process of writing a Business Plan makes you ask the questions you would not ordinarily ask.
3.There’s no getting away from the fact that a business owner who plans ahead comes across as being more ambitious and more focused. A well prepared Business Plan demonstrates you have vision and that you know where you are going.
4.With numerous ideas floating around in your mind, the pitfalls or stumbling blocks to success are never that visible. A mind buzzing with ideas will rarely achieve pure clarity of thought. A Business Plan forces you to put your ideas down on paper in an orderly manner. The major benefit of this enforced planning process is that you may end up taking your business in a completely different direction, or even abandoning your idea altogether. Not a pleasant thought perhaps, but which would you prefer? The loss of your capital or the opportunity to re-think your idea?
5.A Business Plan is an ideal tool to monitor progress against the objectives you have set yourself. By checking progress against your Plan, you will be able to spot if you are moving away from your original vision thereby knowing what has to be put right.
Imagine if you didn't have this check in place; an unnoticed change in direction or a slippage in achieving your objectives, if left uncorrected for too long, could be fatal to your business. On the other hand, it may transpire that a shift from your original vision could be a better alternative, but at least recognising this change allows you to adjust your course in a planned, structured and controlled manner
6.Every action you take has a consequence, and writing a Business Plan helps make these consequences clearer. Being aware of the possible results of your chosen direction allows you to plan ahead, leaving you better able to cope with whatever is thrown at you.
7.Putting your thoughts on paper may make you realise that you need to do more research on a certain aspect of your idea, product or service. Additional research could help you avoid a potentially costly mistake or even uncover a profitable twist to your idea which you had not seen before.
8.A Business Plan will provide you with a guide as to how much money will be required. You may have a rough figure in your head of what you may need, but until you do a Cashflow Forecast you may not realise that an overdraft limit will be required.
9.A Business Plan will help you get funding. One of the main reasons banks turn down loan requests is a lack of information or a clear understanding of the business risks and how they will be tackled. If your Manager doesn't have sufficient knowledge or understanding about your business then he won't feel comfortable enough to support you.
10.By the time you have finished writing your Business Plan you will have a total understanding of your business, its strengths and weaknesses, the environment you are operating in, what could potentially go wrong, and what you can do to ensure your success. Doing your planning on the back of an envelope is not going to achieve this.
You should realise by now that it's essential to have a Business Plan; it could be the difference between success and that dreaded "f" word - failure. It's all about understanding the importance and benefits of planning ahead.
Spend time putting your thoughts on paper in a structured and logical manner. It will pay you dividends, both in getting the bank to take you seriously and securing the future of your business.
About The Author
Rob Warlow is the author of ‘Loan Sharp: Get the Business Finance You Deserve’ which is a guide for business owners on how to increase their chances of getting bank finance. Loan Sharp is available on Amazon and other online bookshops or via his website, www.businessloanservices.co.uk