5 reasons you need a business plan
“Failing to plan is planning to fail” – Benjamin Franklin
Every small business owner knows that they should have a business plan. It’s the very first piece of advice you’re told when you’re starting out and not sure where to begin. Yet, recent studies have shown that around 25% of SME’s don’t have one1. If you’re a part of that 25%, then we’re here to change your mind with five compelling reasons why you should get your business plan sorted as soon as possible…
1) To provide a road map
Without a plan, you have no direction or focus to your business activities. Your plan acts as a blueprint for where you want to be and importantly, how you’ll get there. It helps to align your strategies and your staff, ensuring that all are driving you towards your goals.
2) To manage your time
A plan helps to give order and method to how your time is spent. In fact, it can be a very useful exercise to monitor how you and your employees spend your time over a set period and to assess how much of activities recorded, were in alignment with your business goals and plan.
Creating a business plan will allow you to prioritise and ensure that all business time is spent productively.
3) To create a budget
Once you have a business plan, you can start to project your income and expenses and allocate resources accordingly. You can also flag any potential cash flow problems and make key financial decisions around seeking credit or investment.
4) To support growth
Perhaps the most important benefit of creating a business plan is that it allows you to plan for growth. After all, business growth rarely happens by accident – it happens when it has been carefully planned and that plan has been executed strategically.
Planning ahead allows you to identify key opportunities for growth and to take the necessary steps to go after them, whether that be taking on additional resource or seeking further investment.
5) To identify risks
Lastly, a key part of any planning process is to identify any possible obstacles which may threaten the completion of the plan or stop certain goals from being achieved. Once such risks have been highlighted, then appropriate action can be taken to help reduce the risk or even completely prevent it from happening.
For example, you might identify late or unpaid invoices from clients as a potential risk which could impact cash flow and in turn, de-rail your business plan. To avoid this, you can implement a simple process such as credit checking potential clients first. This will help you to maintain a healthy cash flow and to continue to pay your own suppliers and partners.
Source: 1. Business Advice