By Shweta Jhajharia, Founder, The London Coaching Group
According to the Kauffman Center for Entrepreneurial Leadership, companies with a written business plan have 50% greater sales growth and 12% higher gross profit margins than companies without them.
When you build a good business plan, it becomes clear where the opportunities for growth have been hiding. It also gives prospective investors confidence in the growth of your company so you can secure external funding, if you need to.
If you don’t have a written plan already then the new year is the ideal time to sit down and write one – and ensure that 2015 is a year of sustainable growth for your business.
Here are the four most common excuses I hear from business owners, why they are wrong, and why a written business plan is essential:
1. I only really needed a business plan when I was starting up, or when I need a loan/investment
A business plan is more useful to you than just that. It should be helping you make decisions that keep your business on track, and help you avoid getting distracted from the path towards your ultimate goals.
You should be sitting down every year to strategise for the coming year. Absorb the learnings you've acquired from the previous year and re-evaluate the direction of your business.
2. I don't need to write down my business plan, I've got it all in my head
If you want to experience growth, then not writing down your business plan is definitely hampering your ability to do so. By writing your business plan, you begin the process of systemising your business so that you are not absolutely required for it to run. The way we define a successful business is "a profitable enterprise that can run without you". If you're keeping your business plan all in your head, then that can never happen.
3. I need to change my mind-set in order to stimulate growth, not write a business plan
This is something I've heard time and again – business owners afraid that they're stuck in a small business mind-set and that's why things aren't picking up.
Usually, however, it's not the mind-set that's the problem, but the MODEL.
When you spell out your business plan on paper, you can start to see it as the model, and not put all the pressure on yourself to change. Then you can start to see strategies – usually ones that are really quite simple to implement – that will stimulate growth in your business again.
4. There's no point writing a business plan, the situation in my business changes every few weeks!
Your business plan should be used to create real, tangible and achievable goals, along with actions to achieve those goals. It should let you assess where you and your industry are now and plan out the next steps accordingly.
However, your plan should NOT be thought of as a definite path for your company, but more as an indicator of the general direction you want to go. It should be a manual that gives you the right strategies to keep you on track, no matter what bumps you encounter on the road.
You don't need a business plan; you need to learn how to plan. That way, you can weather whatever uncertainty comes your way.
The importance of having a business plan is universal to almost every business – you cannot be running a business and expect massive, sustainable growth unless you have a good business plan that is actually helping you achieve that.
A business plan helps you set out your goals and helps your team understand how their actions are helping the business as a whole.
It’s a simple fact – businesses with a good business plan do better than those without one.
The New Year is the perfect opportunity to bring it all together, get organised and punch out a really good plan to get your business growth on track.