The Importance of Having and Following a Business Plan
Having a strong business plan to follow can make or break a company. It can clarify the direction of your company, outline your future vision, and help you manage your company in a more organized way. It also assists in determining how you can best grow your business and obtain funding. Before you open your doors to the public, make sure you’ve mapped out your goals and identified tools necessary for long-term success.
Paint a Clear Picture
Small businesses fail when they set out without first deciding where they’re going. The main function of a business plan is to specify an entity’s function and goals. It might be as simple as describing what your business will do or make, or it can provide a detailed description of each product and product category you will offer, along with a demographic description and analysis of who you will sell to.
Map Future Growth
Many successful businesses use the acronym SMART to plan for the future. When they create their business plan, they write goals that are:
- Specific – Each goal should clearly define what you are going to do.
- Measurable – Identify how you can use data or other tangible evidence to evaluate progress.
- Achievable – You probably won’t be able to sell more goods than Amazon your first year in business.
- Results-focused – Each part of your plan should include a desired outcome.
- Time-sensitive – Have a date by which you intend to reach each milestone.
While every business faces challenges that require adjustment, when you start with a plan, you have goals to reach for.
Qualify for Financing
As you gather data, perform a market analysis, make formalized plans, and record the potential for profit, you are creating documentation you can use to obtain business capital. The Small Business Administration and other organizations like it supply loans for businesses that otherwise wouldn’t be able to obtain funding, and part of what they require for approval is a business plan. A formal plan takes your business from an idea to an actionable way to make money, something investors find attractive.
Use your plan to show potential investors why they could make more money by investing in your company than by leaving it in current investments. Convey your confidence in your abilities and your knowledge of the market as you communicate your Unique Selling Proposition.
There may be other like-minded individuals who would join you in your efforts. A formal business plan can become a sales tool for potential partners. Because it’s a written document, it’s easy to share with interested parties and gives you a starting point for answering questions.
Plan for Marketing
The information you gather when creating a formal business plan will be useful when it’s time to advertise your business. If you’re new, other businesses have established methods and dedicated budgets for reaching customers, and you’re going to face steep competition. The same demographic information you gathered creating your business plan is useful in promoting your business to your target audience. Use market projections to plan daily sales and let customers know what you offer.
Diversified Management Services helps businesses create a plan and set up accounting processes. Check out the free business plan resources on our site or contact us for a free consultation.