There are 3 significant reasons why a business plan is absolutely necessary for every business:
1. A business plan is vital to helping you get finance
2. A business plan can help you prioritise
3. A business plan can give you control over your business
A business plan is not a document you create once and store in your bottom drawer. It’s a living guide that you should develop as your business grows and changes. Successful businesses review and update their business plan when circumstances change.
Many people find that the process of preparing a business plan can take a significant amount of time to complete but unfortunately, this is often necessary when a business commences and the plan is required in order to obtain funding to begin operations. For instance, a barista may decide that they want to open up their own coffee shop and have found the perfect location for the shop but in order to be able to setup the business they need to borrow money from a bank to buy equipment and furniture for the shop. In this situation any bank will require a comprehensive business plan before they will lend any money.
Planning for the future is best practice for all businesses in order to ensure they achieve their objectives. Some businesses may decide to update their comprehensive business plan each year, but it’s possible for the planning to be done in a more succinct manner each year. There are a number of methods that make it possible to prepare the plans in a manner that are less than a handful of pages long. Concise plans have the added benefit of encouraging businesses to focus on the matters that are most important so they don’t get distracted by things that don’t actively add value to the business.
At Maddock’s Accounting & Advisory, we help business owners at all stages of this process from preparing their first business plan when they’re looking to start a new business through to developing strategic plans and forecasts for more established organisations.
Contact the Maddock’s Accounting & Advisory team here to find out how we can help.
“Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan. You’ll end up spotting connections you otherwise would have missed. For example, if your marketing plan projects 10,000 customers by year two and your staffing plan provides for two salespeople, that forces you to ask: How can two salespeople generate 10,000 customers? The answer might lead you to conclude that forming partnerships, targeting distributors and concentrating on bulk sales to large companies would be your best tactics.
And of course, a well-written plan is great for attracting talent. When a prospect asks to understand your business, you can hand them a plan that gives them an entire overview. Their reactions tell you something about how quickly and thoroughly they can think through your business’s key issues. Plus, the written record of your goals coupled with a track record of delivering against those goals sends a message loud and clear: You understand your business and can deliver the results you promise. Great employees will respond to that message-as will banks and investors the next time you need to raise money.”
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