Why is a business plan important?

posted by 4 months ago in Features
Why is a business plan important?

A business plan is an important document for every business. An effective business plan should outline the objectives of the business and the strategies required to help the business succeed in its goals, creating a detailed road map. A good business plan will confirm your business idea and purpose, making your operations as clear as possible to potential investors and funding partners.

What are the 3 main purposes of a business plan?

1. Securing external funding – This is one of the most well-known purposes of creating a clear plan. Business plans can help your business secure funding, as it will provide the detailed information banks, investors and venture capitalists require to assess the potential viability of your goals.

2. Highlighting potential issues and opportunities – Planning will help you operate more effectively, by taking into account potential future scenarios. It will help you spot potential issues, so that you can avoid pitfalls, while also highlighting opportunities which may have gone unnoticed.

3. Creating a clear set of goals – A clear plan will provide you with direction and focus, which will make it easier to achieve your goals. The projected pathway will layout a clear set of goals, with the steps you need to take and at what time.

What is the point of a business plan?

There are a variety of individuals which may want to see your business plan, from investors to potential employees. When you are starting to write your plan you need to take into account the potential audience, as different aspects will be under scrutiny by different people.

Naturally, anyone who is thinking of becoming involved with your business will want an overview of the steps your business is taking towards success. For example, if your business needs to take out a business loan, the lender is likely to want to see your business plan. The lender will need to see sections such as cash-flow statements and balance sheets, which will provide an overview of your current and projected finances.

A business plan should be short and concise, so readers can see a clear summary of your businesses aims and current position. There are many possible structures which can be followed when writing a business plan, although the following is a useful overview of the most important sections to include:

1. Mission Statement – What is the purpose of the business? Think about the impact you plan on making to the lives of your customers.

2. Value proposition – A definition of your ideal customer and the niche which you aim to serve.

3. Overview of operations – How will you attract customers? How will orders be fulfilled? Think about how your company plans to operate day to day.

4. Key staff – Although your small business might only employ a single person, think about other people which your business relies upon. For example, an accountant, virtual assistants and external agencies. Who might you want to employ beyond the present time?

5. Finances – The financial section of a business plan is of key importance, so the figures should be accurate as they are likely to get scrutinised at some point. You should include projected sales, wages, costs, a profit and loss statement, cash flow forecast and a balance sheet.

Is a business plan useful?

A business plan is a flexible document which evolves as your company grows and develops. By consistently making minor changes and updates to your business plan you will ensure that you make realistic goals. By referring to your plan regularly, you will always know whether your business is on target. The plan will highlight any areas which are under performing and new opportunities which could help your business grow.

Whether you are an established company looking to increase cash flow to take advantage of a new opportunity or one of the many small businesses just starting out, we can help. As a comparison service we have partnered with a variety of lenders, so businesses can compare funding options and get the best deals possible. To find out more about how we can help you make the most of your opportunities, please contact our team today.