No company should be without a business plan, and indeed there are some instances where failure to have a viable one could impede on company performance, like when applying for business funding. Investing time in the creation of a business plan will therefore have long-term benefits for your company.
What is a business plan?
Think of a business plan as a map of your planned journey. You will provide details of where the company is currently, where you intend to go and how you will get there. You will even include potential risks and challenges you may face along the way. If you discover midway through the journey that you have made a mistake, you can change the route and try something else. Potential investors and your bank will prefer to see a plan of your business and may refuse to invest if you don’t have one, or if the one you have is not thorough enough.
Why you should create a business plan?
Aside from its value to potential investors, creating a plan of action will make sure that you follow the right path in order to develop and operate the business. It will help you focus on targets and goals without getting sidetracked.
If you want to apply for finance, you will find that having a business goal is crucial in most cases. Potential investors want to see that you have goals measured with minimal risks. A plan also indicates that you have made arrangements to tackle any risks that may occur, reassuring the investor that they will get a return.
As a manager, a business plan helps to keep you on track to achieve specified goals. A plan is a management tool and may be used in conjunction with management accounting to progress the company. The plan is also useful as a measuring device, as you will be able to see why you didn’t achieve some goals or excelled at others.
What are the risks of not having a business plan?
It can ultimately lead to business failure. You may experience cash flow problems as you haven’t anticipated production costs, or you could fall short of your anticipated turnover as you failed to plan your marketing campaign. Without a plan of action, you may fail to deliver the very best service to clients, which could lead to loss of custom.
A business plan is the central point of any business. If you would like some advice on preparing a plan, give us a call and we can arrange an informal meeting.