Why every business needs a business plan

From the early stages of developing your business idea, through to the strategic planning of your venture, it’s essential to create a plan for your business.

While some small business owners and entrepreneurs may think they don’t need a business plan, it can provide a roadmap to growing your business, and help to establish untapped market potential for your product or service. The deep thinking that comes from putting together a plan can tell you a lot about your business, and give you insights that you may not otherwise have realised.

Firstly, what is a business plan? 

A business plan is a templated plan that enables you and other people to clearly see how your business is to be run, what steps need to be taken in each area and stage of business, and what resources are needed (such as time and money), to enable you to reach your goals and objectives. This strategic document and tool allows entrepreneurs to look at their business as a whole from the outside, and can help you to secure funding or bring on business partners.

So, what does a business plan tell us?

A business plan is a detailed document that describes in clear language the current and future of your business, and the industry you are in. It tells your story of how and what you will do in order to be successful in your business.

Key elements included in a business plan are:

• A business description: this includes your goals, your product or service, and your target customers
• Market analysis: this gives you a key understanding of your industry, and data and statistics that will help to inform your potential customers and how you could succeed over your competitors
• Competitive analysis: this section provides a comparison between you and your direct and indirect competitors. It will highlight your strengths and weaknesses, and identify any issues that could prevent you from succeeding in the marketplace
• A break down of your product or service: this section will identify key suppliers, costs of bringing your product or service to market, and how much money you hope to earn
• Marketing plan: this section is used to describe how you will get your product or service in front of your target customers, and the marketing channels that you will use
• Sales strategy: this section highlights how many sales you need to make to breakeven, and to achieve your sales targets
• Financial projections: this section breaks down your financial goals and the expectations you have set for your business. You will also anticipate your earnings for the first 1, 2, 3, 4 and 5 years of business

Why is a business plan so important?

Many entrepreneurs start businesses without a plan, and make mistakes that could have been avoided along the way if they had a clear strategy or plan in place. A business plan is important because it provides you with a tool that you can go back to, and will guide you when making important decisions in your business. It will also keep you on track with key goals, objectives and metrics that you have set for the business.

Some of the most common reasons that small businesses fail is due to faulty business models, unsuccessful marketing initiatives, and ineffective planning. The percentage of businesses who fail without a business plan is much bigger than those who have a plan in place, which is used to steer them toward success.

How you can use a business plan to grow your business 

A good business plan guides you through the different areas and stages of your business. It will help you to think through and detail the specific ways in which your business will be successful to acquire growth. Business plans are also a requirement if you are seeking investment from financial institutions, investors and potential partners, all of whom will want to see some form of a plan in order to do business with you.

Writing a business plan can be overwhelming, particularly if you are a new entrepreneur. The team at Work My Own Way can give you tips and resources that can help you conduct analysis, and get clear on your business, your goals, and how you will succeed. Learn more here.