If you are in the process of starting a business or considering expanding an existing business, most advisors, and books written on the subject, say you must have a Business Plan. You may be doubtful given that it means you need to take precious time out of your busy schedule to put your plans on paper.
But do you really need a Business Plan?
A survey carried out on 400 UK entrepreneurs by SimplyBusiness revealed that 54% of business owners don’t have a Business Plan. Shocked? I was. Based on my experience when dealing with both start ups and seasoned business owners I thought the figure was on the low side! Only 54%?? Come on. I can count on one hand the number of business owners who have a Business Plan.
So, is a Business Plan as essential as we’re led to believe? Can you build a business without one?
What’s the Answer?
The simple answer to these two questions is… yes.
Yes, a Business Plan is essential; and yes, you could still build a successful business without one, but the unknown aspect is, could you have been even more successful if you had written a Business Plan?
You’ll never know but perhaps now is the time to think again.
Perhaps you are not sold on the idea that all the effort required to prepare a plan is worthwhile. If this is you let’s consider 5 key benefits for you and your business.
Feasibility and Viability
Taking time out to write a Business Plan will assist you in assessing the feasibility and viability of your idea. You may assume that sitting back and planning your future empire in your head is going to cover all the aspects of your business. Maybe, but the process of writing your thoughts down on paper will bring to the fore all the risks and potential pitfalls you hadn’t thought of. A Business Plan forces you to put your ideas down in writing and in an orderly manner. The result of this could be you going in the opposite direction or even dropping your idea altogether. Not a pleasant thought, but which would you prefer? Losing your capital or the chance to re-consider your idea?
A Measuring Tool
A Business Plan is an ideal means of monitoring your progress against the objectives you set yourself. By checking the progress you are making against your Plan you’ll be able to quickly identify if you are drifting from your original vision; know this and you will be able to take corrective action.
Consider if you didn’t have this check in place; a slight change in direction, if not spotted or left uncorrected for too long, could be damaging to your business. On the other hand, it may be that a swing from your original vision would be a more profitable alternative, one which may not have come to mind before. At least with a Business Plan you have given yourself the choice.
Get the Numbers Right
Do you really know with 100% certainty how much money you’ll need? Have you covered all the possible financial eventualities? It’s difficult to answer yes to this question if you don’t have a Business Plan.
A Plan will challenge you to consider whether you have the correct amount of funding needed to make your idea work. You may have a rough estimate of the funding you require, but until you prepare your Financial Forecasts you may not realise that a few extra thousand is needed.
Helping to Get the Bank on Your Side
One of the key reasons why banks don’t support requests for finance is lack of information. If your manager doesn’t have a good enough ‘feel’ for your idea or business then you are giving the bank every reason to say no.
A Business Plan will make the bank feel much more comfortable about the risks they are being asked to take. Without information to balance out the pros and the cons it would be easier for the bank to say ‘no’ and move onto the next request. By investing time in preparing a plan you are improving your chances of success of getting support from your bank.
A Business Plan Can Say it Better Than You Can
Not everyone has a smooth way with words and sometimes even the best communicator’s need the back up of the written word. No matter how good a presenter you are, it’s unlikely you will be able to convey your vision as clearly as a Business Plan. Too often a business owner will try to sell their idea to their bank or a potential investor and at the end of the session the manager is none the wiser than he was at the start. A Business Plan leaves little or no room for misunderstandings.