Running a business can be unpredictable, so having a solid business plan as a foundation is vital for surviving and thriving in the early days of your startup. A well-crafted plan can propel your startup and help your vision come to fruition.
Business plans can be considered affordable insurance. Just as many people don’t purchase fire insurance for their homes and rely on luck to protect their investments, many successful entrepreneurs don’t rely on written business plans but trust their instincts. However, your business plan is more than insurance. It reflects your ideas, intuitions, instincts, and insights about your business and its future, providing the cost-effective assurance of testing them before committing to a course of action. There are many reasons to create a business plan, and more than one likely applies to your business.
- A plan helps you set specific goals for managers.
Good management requires setting specific goals and then tracking and monitoring progress. As your business grows, you want to organize better, plan, and communicate your business’s priorities to your team and yourself. Writing a plan makes everything clear before discussing it with your team.
- You can share your strategy, priorities, and plans with your spouse or partner.
People in your personal life intersect with your business life, so shouldn’t they know what should happen?
- Use the plan to explain your strategy.
A simple definition of strategy is, “What you do isn’t something you don’t do.” Your project will explain why you’re doing what you’ve decided to do in your business.
- A plan helps you figure out whether to rent or buy new space.
Do your growth prospects and strategies justify taking on the increased fixed costs of a new area?
- You can explain your strategy for hiring new people.
How will new hires contribute to your business’s growth and prosperity? What exactly will they do?
- A plan helps you decide whether to acquire new assets.
How many new assets do you need, and will you buy or lease them? Use your business plan to help determine what will happen in the long term and how long big purchases like computer equipment will last in your plan.
- Share your plan with your team.
Explain your business objectives in your plan to your leadership team, employees, and new hires. Also, make selected parts of your plan part of new employee training.
- Share parts of your plan with new allies to bring them on board.
Use your program to set goals for new alliances with complementary companies and disclose selected details of your project with those companies while negotiating an alliance.
- Use your plan when dealing with professionals.
Share selected parts of your project with your lawyers, accountants, and consultants, if necessary.
- Have all the information in your plan when you’re ready to sell.
Sell your business when it’s time to put it on the market so you can help buyers understand what you have, how much it’s worth, and why they want it.
- A plan helps you define business valuation.
Valuation means how much your business is worth and applies to formal transactions related to divorce, inheritance, estate planning, and tax issues. Typically, this requires a business plan as well as an experienced professional. The project informs the valuation expert what your business is doing, when it’s doing (or will do) certain things, why they are being done, how much that work will cost, and the benefits it will produce.
- You can use plan information when you need money.
Seek investment for a business no matter what growth stage it’s in. Investors need to see a business plan before deciding to invest or not. They’ll expect the plan to cover all the key points.
