By Gerard Burke, Founder & MD, Your Business Your Future
Someone recently posed this question on our Ambitious Owner Managers group on LinkedIn and received a deluge of replies. A few argued that a business plan is only necessary if you’re looking to raise finance from a bank or impress investors, and that the rest of the time, business plans just sit in a cupboard gathering dust. The majority saw differently and could see at least ten good reasons why it’s not just important but imperative to have a living, working plan for your business.
1. A plan is like a road map - without one you can lose your way. If you have a plan of where you’re going and how to get there you don’t have to make a decision every time you get to a junction.
2. It’s more likely that you'll create the better future you want for your business and for you if you can articulate it clearly and put together a clear, comprehensive and robust plan of what you will DO to get you from where you are now to where you want to be.
3. In any situation where there are more than a couple of people involved you have to write down your thoughts to make sure everyone is pulling in the same direction and understands priorities. A business is no different.
4. Many business owners are so bogged down with day to day issues that strategy gets forgotten, leading to missed opportunities or threats. One of the most important aspects of planning is looking at the strengths, weaknesses, opportunities and threats that exist. It can provide a real focus for addressing the big issues.
5. When it’s clearly communicated, a plan ensures that no matter how large your organisation, every individual understands exactly the company’s expectations, aspirations and ambitions.
6. A plan provides a benchmark for monitoring performance and where necessary can be a trigger to respond to changing circumstances. Without a plan, you run the risk of floundering when a curve ball is thrown at you.
7. A plan provides a useful focus for sales meetings, team building days and management reviews.
8. The process of planning is usually more valuable than the document itself. It creates clarity in the mind of the owner manager and can inspire, motivate and drive those involved in its creation.
9. Besides creating clarity, a plan also inspires confidence helping you, your people, and external stakeholders believe that you really will achieve your goals.
10. A plan is essential if you’re trying to obtain any sort of credit, investment, funding or asset finance. It gives the investor confidence that you have a sound idea of when and where you’re going to get the cash to service the debt.
It’s clear that a myth surrounding business plans is that they have to be hefty tomes that follow a rigid structure. On the Better Business Programme our participants create ‘plans for their businesses’, which are living, working documents and are very different to the ‘business plans’ that are required by banks and then never used.
The plan you create for your business could be any of a wide range of formats, and there's no set table of contents. You need a plan that works for your purpose and for your audience. Even if sometimes that audience is just you!
At the same time, the only thing that can be guaranteed about a plan is that reality won't work out quite like the plan - or as the Army says, a “plan never survives the first encounter with the enemy”. Which is why the process of planning is often more valuable than the document itself and why reviewing your plan should be an ongoing process, not a one off event.
Interested in developing a business strategy to kick start your business? Watch the video below for some top tips from Guy Rigby, Head of Entrepreneurs, Smith & Williamson.
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