Why a business plan is important
We live in an age of entrepreneurship. The abundance of business resources and new opportunities out there means that everywhere you turn, it seems like everyone and his auntie is launching The Next Big Thing. But just having an idea isn’t enough, so it’s time to explore why a business plan is important.
The process of developing a business plan is often overlooked and skimmed over. Too many people don’t understand why a business plan is important. They see it as a dull bit of admin that they don’t have to pay much attention to. They know what their product is, and they know they’re going to sell it to lots of people and make lots of money. A nice idea, but very vague and, therefore, completely missing the point.
One of the main reasons why a business plan is important is that it forces you to think more specifically about the progression of your business – the what, where, how and when of production, sales, marketing, finances and all the other areas of your operation. Your business plan should be as much a part of starting your business as establishing your product and your customer base. Written properly, it contains profit forecasts, cost projections, industry information and marketing strategy.
The process of clarifying these points may seem time-consuming, but it forces you to quantify facts about the viability of your business. A key aspect of why a business plan is important is in its removal of the exuberant optimism that many new business owners have – when the facts and figures are on paper and staring you in the face, it’s very hard to think “let’s not worry about it now, we’ll find a solution later”. In this way, a business plan can assist the growth of a business before it even gets off the ground.
A business plan also helps you to think about how you might feel as your business grows. More specifically, you’ll identify potential challenges and risks. Your business plan can act as a “sandbox” – a safe environment where you can think your ideas through hypothetically and test theories, thinking about how circumstances might change at a point in the future rather than waiting until that time arrives. You can plan strategies to cope with challenges in advance, so if they do arise – and chances are, they will arise – you’ll know how to deal with them.
When business owners consider why a business plan is important, another point they miss is how your plan acts as a mission statement for your organisation. Your business plan is always there for you to refer to, a solid reminder of your values and principles in addition to profit projections. In this way it helps you to focus your thoughts on the identity of the business, and can be invaluable in helping new staff to understand your business’s place in the wider marketplace.
So now you understand why a business plan is important, ask yourself if yours is up to scratch. If not, contact Agenda now and let’s get things in shape!