How does a business plan help an entrepreneur?
If a business strategy is a guide, then a business plan is a roadmap with all the junctions marked, and necessary pit stops taken into account. I did not create a business to manufacture papers; I hear you say. Bear with me, let’s see how a business plan helps an entrepreneur in the long term.
Business plans have a bad reputation as a necessary evil that banks and government funding agencies ask for. I suppose some think of it as a document that is externally focused. If that is what a business plan stands for in your head, perhaps it’s time to change its label.
Think of it as a companion document working with your business strategy.
It incorporates financial projections, information on your target market, product ideas, and links them with the processes needed to launch those services. It points towards marketing strategies and marketing analysis connected to your business idea.
What period should a formal business plan incorporate?
Traditionally, you would look at six months to a year, with all the actions for the first half of that interval detailed. These days, I recommend an ever-shorter duration and my clients are working with quarterly business plans. These seem to be most practical, not only due to the uneven (and unpredictable) situation caused by the pandemic and Brexit, but it also makes it more manageable.
If, during those 90-day planning sessions, you get ideas for actions appropriate outside of that period (as it often happens), write them down and review at an appropriate moment. Those grand ideas have a way of distracting us from what needs doing in the present moment. Anchoring them in the future is a way of turning them into motivators rather than shiny disruptors.
Having a business plan helps balance your efforts and avoid overwhelm.
Setting up a business is an exciting task that can quickly become an overpowering one. In the early days, many of us need to combine the joys and responsibilities of being a founder, a leader, a maker, salesman, customer service advisor, and then some.
Working in tandem with this tool is a way of keeping you and your business on track, incorporating customer feedback, and market fluctuations.
It ensures you, your team and investors are on the same page as the business grows.
It gives them an idea of what you want to achieve and what actions need to happen to make those ideas a reality. And it literally shows that you have a plan, which improves confidence and engagement. Of course, it is a dynamic document – that is a whole point! But even when it changes, it shows why, not only how, helping you avoid the sense of doubt, limbo and inaction.
It demonstrates you have options.
That you have thought things through, you are keeping tabs on the market and are actively pursuing new opportunities.
It’s a useful tool when managing financial obligations and cash flow.
Write a business plan to see when you need to scale up, introduce new products or services, intensify sales and marketing efforts, invest in equipment – or perhaps lease what you need, outsource or hire new talent. A business planning process not only encourages you to make financial projections, but it also adds clarity to when you may want, or need, to spend money and on what. And perhaps where to save some as well.
An exciting part pack of a welcome pack.
Being able to pinpoint objectives of the business and the role a new recruit plays within the structure of your enterprise, be it a small business, a startup or an established venture, smooths out the welcoming process and adds clarity to the proceedings. It also makes it easier to assess progress and describe what success looks like for the campaign and the business overall.
Whether you wish to attract a venture capitalist, an angel investor or create a campaign open to the public, having a business plan in place can significantly speed up the preparation process. Before investing, your potential finders may want to see your plan and having one in advance can save a lot of headaches. However, the most important aspect of having one is that it contributes to your success as a business owner. Isn’t that one of the reasons you started your business?