Why Is A Business Plan Important
There are lots of reasons to have a business plan, and I’m sure you’re aware of many of them. However, one of the most important reasons—and one that’s often overlooked—is the value of having a business plan for your own inspiration, motivation, guidance and achievement.
Having that document in your desk drawer or saved to your hard drive will provide the guidance you need to make beneficial decisions for the building and growth of your start-up, small business or micro-business.
So, you know it’s a plan for your business. That’s pretty obvious.
But what, exactly, should be in that document?
Each business plan should be unique and tailored to the company it represents.
However, let’s talk in general terms, about what items are found in nearly every business plan.
The Items Found in a Business Plan
Your business name should be something that explains what you do, that uses words your audience is familiar with, and that is internet-searchable. Being clever or creative is far less important than being clear when it comes to your business name.
This is only necessary in some instances, when a business name can’t possibility explain what your business does.
Your mission statement will tell employees, customers, suppliers, investors…and even remind you…why you’re in business, what you intend to accomplish, and how. It should be made readily available to anyone who wishes to see it, as well as those who need to see it.
Will you operate as a company or a sole trader? How about a partnership or a trust? Knowing the benefits, liabilities and tax requirements involved with each type of entity will help you decide which one best suits your purposes.
Will your business operate locally? Or internationally? Or globally? The highest concentrations of your ideal clients may be in a country across the globe. Knowing this, along with cultural implications and trade regulations, will assist you in planning ahead for this type of expansion—no matter the size of your business.
Identifying your business’s strengths, weaknesses, opportunities and threats will prepare you for competition and growth. These are not only the things your business will come to be known for, but the directives you’ll use when making the decisions that will lead you to accomplishing your mission.
Products and/or Services
The products and services your business will offer should be decided upon using a number of critical criteria. The choices you make will determine the mark you leave on your industry (and on your customers). Details like suppliers, manufacturing and distribution will also have to be worked out and listed in your business plan.
Copyrights, Trademarks and Patents: Protect yourself and your business by securing the proper safeguards for your intellectual property.
Your pricing structure says a lot about your business, and solid decisions in this area will lead to profitability. Perform the calculations. Make the proper considerations for maintaining margins. And never complete with price alone.
What makes your business different from the others in the market? If you don’t know, it will be buried under a mountain of other non-descript companies. You’ve got to be different, distinctive…and undeniable unique. That’s the only way you’ll get noticed, and the only real way to compete.
Even if you plan on handling every task by yourself in the beginning, you’ll need a hiring plan for the future. Which tasks will you delegate first? Will you hire a full-time employee or will you pay contractors on a per-diem basis? Having a staffing strategy in mind will help you to stay focussed on those things that you do best, whilst working to grow your business.
Who has the problem you’re planning to solve? What are their characteristics? What solution are they expecting? Research different groups to determine who needs your product or service the most and then create a customer avatar, to keep you (and your language) focussed on their needs.
How will you reach your demographic? Where will you find them and when should you reach out? Knowing where to be, when, and with what is how master marketers experience success. You can do that too with lots of research into your ideal client’s behaviour, with knowledge of all the marketing channels available to you, and with a willingness to measure each campaign’s ROI (Return on Investment).
Your Business’s Story
Knowing where your business has been (and telling the story of that journey) will prove valuable to potential customers, team members and investors…and it will remind you why you’re pursuing this passion of yours. Stories endear people to other people, and your business should have one that you share readily with anyone who will listen.
Knowing where your business is going is just as important as knowing where it’s been, and your business plan should include projections like new products and services you anticipate, new sectors you plan to target, ways to increase sales volume, methods for increasing your brand’s reach and more. Identify the opportunities you see now, in order to keep those doors open.
Whew! That seems like a lot, I know. But just think about how focused and purposeful you’ll be in all your business dealings when all of this information is organised in one place, for you and everyone involved to reference whenever necessary.
Only half of business owners create one, and yet, having a business plan doubles your chances of success.