Importance of a Business plan.
In one of the posts I made earlier about writing a business plan, we discussed in-depth all it takes to draft a business plan but we didn’t touch on its importance. We shall today look at the importance of a business plan in a business.
So many businesses operate without a business plan for some reasons best known to the owners of those businesses. No matter what the reason maybe it is to the detriment of the business.
Some is due to the fact that they don’t know how to write a business plan.
A good business plan not only guides you on where you are going but also helps minimize distractions in a business because it the blueprint of the business.
A business plan helps an entrepreneur to be disciplined towards the running of his business because of the written goals and objectives in it.
A business plan includes information that can help improve and increase the chances of a business success. Marketing analysis, financial projections, logistics and operation and other things are the important parts a business plan should cover.
Business plans are very important to a business success. In case you are still not considering drafting one, let me show you why a business plan is important.
Why a business plan is important
Helps in terms of critical decision making
While there are many reasons to have a business plan, the biggest is for it is to guide and prevent business owners from crashing so they can make better decisions.
Preparing a business plan gives you a room to prepare an answer to a question before it comes.
Because entrepreneurs are always a set of busy people it be will difficult have meeting regularly to plan. This is where a business plan comes into play. It saves you a lot of time and energy you would have spent making decisions always.
Helps in avoiding mistakes
Having a business plan will help check the potential mistake you will make in a business. While mistakes cannot be totally avoided in a business, in fact mistake are responsible for business growth when they are corrected, but a business plan can help in avoiding the deadly mistakes so your business can keep going.
Small businesses hardly live long enough to celebrate their fifth birthdays because of lack of a business plan in place or a poorly written plan.
Follow up to your objectives
With no business plan in place you will deviate from following your business objectives and will ultimately lose focus.
Having a business plan to guide you to follow up to your objectives will have you running a successful business and the might live to celebrate its fifth birthday.
Doing a business with a well written business plan will help you to be more accountable to your long-term business vision. It also gives one an insight on how his/her business is (or not) coming together.
Having a business plan makes you more intentional towards your business.
It is important for securing a loan
A business plan plays an important role in securing a business Loan for business expansion and growth.
You don’t need to write a bulky textbook as a business plan it can a page or less than ten provided its covering the essential parts of a business plan. One can write a business plan in less than an hour. You just need a document to hand to the bankers that there is really a market for the problem your business is trying to solve.
Your business plan should be simple enough for your partners and supporters to easily understand your business models and financials. It will be better if you present them in a graphical form for better understanding.
Helps in Business Growth
Research has shown that a business plan helps a business grow by 30%. Having the business plan alone doesn’t give such a growth percentage but the process and a time to time review the plan guarantees success.
A business plan is all about setting goals, following up your plans, updating and reviewing your plan as your business expands.
Beyond the 30% growth research has shown also that businesses that have a business plan actually perform better than those who don’t have.
You can be a manager with two or even hundred people to manage. No matter how large or small the number may be you cannot always be there to communicate the business objectives to your employees.
A business plan will serve as a representative to you during your absence as all questions your employees will ask concerning the business, the business plan will be there to answer handy.
Let your employees know that whenever they are unclear about something, they can always refer to the business plan for guidance and reference.
Reduces business risk
While risks are always there in a business, having a business plan will help reduce the risks you have to bear. Entrepreneurship is indeed a risky business but a business plan helps minimize the risk.
With the business plan in place, you are going to have a financial projections section, logistics and operational plans and other parts of the business. You minimize risk by following it religiously.
Foundation for prioritization and planning
One of the keys to business success is prioritization. Planning is another. The business plan helps you map how your earning/revenue fit your expense budget in the business.
A business plan gets every member of your team involved. With the business plan you can explain and show even graphically how you can move from one point to another in the business.
Getting everyone on your team involved and on the same page will increase efficiency in the team. Everyone in the team will be able to see the big picture and move towards it for common goal of the business or organization.
If all your team players understand how their individual efforts will work to make the business better the more they will get their hands dirty to see that the organization’s objectives are met.
Help to set realistic goals for a business
A business plan guides you to set achievable business goals and meet your business objectives.
It is almost useless to write a business plan and skip any goal or milestone you wish to hit. Without a business plan you set a goal, change it because it is not realistic or you will not be able to not follow up the process to achieve it. A business plan is a guide for you and your team to follow and achieve every business goal you set to achieve.
A business plan is the blueprint of your business. Having it to guide you in the business will guarantee you don’t go out of plans and objectives to chase other things.
The importance of a business can never be overemphasized in a business.
Don’t just stop here google some more importance to know more.
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See you in the next post.