By Karlene Sinclair-Robinson
Great question! Here are some more for you!
Why should you write a business plan when you already know what to do? You know how to make things happen in your business!
Why bother to write a plan you’ll probably never use? You’ll only waste time and effort in creating one.
Well, let me help you figure out why you should seriously consider writing a business plan: one you can use.
I often get the opportunity to work with business owners at various stages in business, from startups to long-standing entrepreneurs creating an impact. It is great seeing the difference these individuals are making in their communities and their own lives. The value they bring to the world of entrepreneurship is indisputable!
The fundamental difference I found with these business owners is this: some wrote out their vision and plan of attack, while others skated by on what was in their heads. I found that the individuals who prepared for success, through planning, execution, analyzing, and re-alignment, were more successful. They made things happen in a more organized way while the owners that managed their companies without a plan missed vital opportunities. The owners who did not use this method ended up not having the business plan forecast to compare to their current actual numbers.
The companies using the comparison method could see more clearly the direction their company was taking and could make adjustments accordingly. These entrepreneurs were not operating blindly or stumbling around in the dark! However, the owners who did not plan for their business growth ended up having more difficulties.
Importance of Effective Planning
The importance of planning when in business is an essential element to one’s success. However, it is not just in business planning that it is critical. It is vital to use what is laid out in the business plan. Using the document as an action step tool that affirms the goals and objectives set forth is essential.
So, yes, it is necessary to write out one’s vision, goals, mission, and expectations. It is crucial to lay a foundation to build on. Writing a business plan will help create a structure through which a company will operate. It will help define the company, how it will hire, how to attract customers, and most of all, how it will make, spend and keep the money they make.
Here are a few things you should consider when writing your plan:
1. What are you selling?
You must identify what you are selling. If you are selling products or services or both, how you offer them can make the difference in your cash flow. Being able to provide solutions that solve a problem, help others, and improve lives helps a company have longevity. So, you could be selling bananas or providing a fitness service; you must present them in a way that would appeal to your customers.
2. Who is your ideal customer?
The business owner who understands its customers, their wants, and needs, will grow and be more successful over time. They will benefit financially as the business owners know how to meet the customer demand and supply what they require. Pay attention to the customer, especially those who are sharing their thoughts on how you can improve your business. Customers, or clients, want to feel needed and will be more willing to stick with a company if they think they are valued, not just for their money, but for their shared knowledge.
3. How will you make money?
Whether you are selling a product or service, it is import that you know how to forecast your sales. You must determine how many products or specific service customers must purchase that will meet your monthly forecasted numbers. The revenue must be higher than your monthly expenses to be profitable.
4. What are the goals of the company?
The company that gets started or tries to operate without goals is not going to be as successful and profitable as one that does use them to drive their processes. Financial, management, client, and product or service goals are essential. Achieving key milestones helps set a company up for financial success. These could include the number of clients acquired or products sold.
5. Will you need to borrow to fund your business?
Business owners must know their financial needs. The amount of money needed to start or expand a business must be clearly defined. Every lender or investor will want to know why the money is needed and how it would be used over a specific time period.
6. Why must you create Financial Forecasts that makes sense?
Creating financial forecasts for one’s plan is often one of the most challenging areas. Many business plans presented to lenders are often lacking in precise financial projections. The financial projections must connect to all aspect of the overall business operation process. The forecasting process should include legal, hiring, marketing, purchasing, and every other area where money must go out of a company. Preparing financial forecasts that connects how you plan to make money and the spending aspect is a vital element of a good business plan.
7. What is your exit strategy?
It is vital that there are exit strategies in place when starting, growing, or financing a business. You can start and scale a company to sell at a future date for a profit. A business needing financing can plan on paying off a loan over time or through refinancing or plan on a short-term process with a balloon payment at the end. There are many ways to consider when developing exit strategies, whether you plan to start, grow, or fund your business.
Develop your plan today. Use it as a guardrail or GPS to help you focus on building a successful enterprise. Too often, individuals miss the opportunity to build sustainable companies all because they didn’t plan for it. Don’t let this be you!
Want to see if your plan is viable?