Whether you are just starting out or been in business for 40 years, having a business plan is crucial to the long term success of the organization. Even more importantly and what entrepreneurs may sometimes not see is that a business plan feeds into and affects EVERY aspect of your business.
A BUSINESS PLAN is important to your bankers!
You cannot get financing for growth or expansion from ANY financial institution unless you have a business plan. PERIOD!
When you seek financing for your business, it is important to clearly describe the opportunity, as bankers will want to know:
- Why they would be better off investing in your business, rather than investing in another business?
- What is the Unique Selling Proposition (USP) or competitive advantage for your business?
- Why will your customers part with their cash to buy from your business?
A well-written business plan will clarify these questions for prospective bankers, giving them more confidence in you and in the thoroughness with which you have considered your business’ future.
A BUSINESS PLAN is important to market your business!
If you don’t have a plan you can’t create a BUDGET. If you DON’T create a BUDGET, how will you know what you can achieve?
How are you going to determine if you can do all the things you say you want to do if you don’t plan? Let’s say you want to hold a promotional event in March 2017 to launch a new product. Granted, you may put together the numbers for this event to ensure that it is successful like catering, tent rental, decorations and so on; but what about the other promotional things you want to do in the other 11 months. Do you even know how much you are spending on social media, flyers, billboards, posters, website development and radio ads every month? Having a strong business plan will help determine what needs to be spent in your business to increase sales.
A BUSINESS PLAN is important to develop new alliances!
At some point in order for any firm to grow they will need to develop new alliances. These alliances can take the form of consultants, coaches, accountants and lawyers who are vital for the day to day running of the firm as well as external (non competitive) collaborations with individuals and companies that help grow your sales. Either way, you can use your plan to set targets for new alliances, and selected portions of your plan to communicate with those alliances.
A BUSINESS PLAN is important to manage cash flow!
Perhaps one of the most difficult things for small businesses is managing their cash flow. But it is one of the most important! The reason is quite simple–many companies fail, not because they are unprofitable, but because they ultimately become insolvent (i.e., are unable to pay their debts as they fall due). Don’t let this happen to you. Building a business plan will help you determine what needs to be paid every month and by when.
Now my list can go on and on and on… but I don’t want to scare you into thinking that a business plan has to be a long drawn out document. Don’t swallow the obsolete idea of the business plan as if it were a thesis you have to write. That’s not true anymore. But the fact is that a business plan — even just a one-pager with a few financial projections — can be a valuable internal tool. It can foster alignment, set the tone for the business and even help you craft your brand messaging.
ABOUT THE AUTHOR:
Debbie-Ann Jollie is a Marketing Strategist and the principal Director of HashSpace Limited. She is a certified trainer with over 15 years’ experience in marketing management both in public and private organizations as well as through consulting.