Wednesday, November 23, 2022

The importance of business plans [10 reasons]

 The debate continues about whether or not business plans are necessary. Some say they are not needed, yet in today's world, the functionality of the business plan cannot be eradicated. They have been used for various purposes; govern operations and funding are two of the main areas. 

The process allows the business owner to critically think about their business and then along with the writer/preparer of the document develop a document which cements these plans. 

If we were to look at 10 reasons for a business plan and the processes required well the following should help to make it clear. 

  1. Good business plans are NOT cheap. You have to research the information that goes into the business plan and it needs to be current; not over a decade old. This was seen in many instances where people opted for cheaper plans and they didn't realize their objective and the client then had to seek additional help. Accessing the up-to-date information to go into the plan is expensive, they are prepared through studies done by individuals and institutions who fill that role. 
  2. You can get technical assistance for preparing a business plan; some even provide total/partial funding to assist you in getting this process completed.
  3. You need to work with your team to get a solid business plan done - Yes, your team should comprise an accountant, legal, financial advisor, operations, marketing, and your business advisory support. These are broad headings since your team may be larger when you drill down. 
  4. Proper business structure - too many people are forming businesses without using the correct structure for their operation. Your business structure is key to your success, especially if you operate under the broad categories of for-profit/not-for-profit. 
  5. The business plans, especially those seeking funding, will be scrutinized heavily by financiers. Don't try to sell heat with your financials, they will be converted using ratio analysis to see a more realistic picture than the currency's initial stories. 
  6. Use assumptions that make sense. Telling someone that the market is a certain large size and that you can control 1% of that market as a segment is not as easy as one would initially think. You end up shooting yourself and your business in both legs when you cannot deliver. Your credibility is then shot and it seems like you are not competent to run such an operation. 
  7. Understand money follows management. This is not a cliche. Have a solid management team in your planning complete with what their required roles entail. 
  8. Due diligence will be done. Are you statutorily compliant? Is your reputation for treating staff well sound, do you pay your bills on time; these and others are questions that will be asked and answered. 
  9. Is your business well thought out? 
  10. Not all the money you pay for the business plan is for the vendor to keep, they have resources they have to pay for as well to ensure you get the best results for your plan. 
Also, consider getting your business model worked out. This enables you to enhance your performance within a competitive market. To get more information and access to resources, contact and learn what you need to do. We have teams that can help you. 

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