Nearly all business experts agree on one thing: the importance of drafting a business plan. Yet plenty of (businesses) plunge into the competitive arena without a formal plan. Why? We’ve heard plenty of excuses posing as reasons.A lot of new (start-ups) are carried away and figure their passion and optimism are enough to build a successful business. Others say they were just too busy to develop a formal business plan. But operating without a plan can prove even more time-consuming in the long run.
The Benefits of Having a Business Plan:
The time you invest in (making) your business plan will pay off many times over. Some of the most obvious benefits you can gain from business planning include:
– An opportunity to test out a new idea to see if it holds real promise of success;
– A clear statement of your business mission and vision;
– A set of values that can help you steer your business through times of trouble;
-A blueprint you can use to focus your energy and keep your company on track;
– Benchmarks you can use to track your performance and make midcourse corrections;
– A clear-eyed analysis of your industry, including opportunities and threats;
– A portrait of your potential customers and their buying behaviors;
– A rundown of your major competitors and your strategies for facing them;
– An honest assessment of your company’s strengths and weaknesses;
– A roadmap and timetable for achieving your goals and objectives;
– A description of the products and services you offer;
– An explanation of your marketing strategies;
– An analysis of your revenues, costs, and projected profits;
– A description of your business model, or how you plan to make money and stay in business;
– An action plan that anticipates potential detours or hurdles you may encounter;
– A handbook for new employees describing who you are and what your company is all about;
– A résumé you can use to introduce your business to suppliers, vendors, lenders, and others.
What can go wrong without a business plan?
The many benefits of having a business plan should be enough to convince you. But in case you’re still wavering, consider what can go wrong if you don’t take time to plan. You risk:
– Running out of cash before you open your doors because you haven’t anticipated your start-up costs;
– Missing sales projections because you don’t really know who your customers are and what they want;
– Losing customers because your quality or service falls short;
– Becoming overwhelmed by too many options because you never took the time to focus on a mission and vision for your company;
– Going bankrupt because you don’t have a rational business model or a plan for how to make money.
Take our word for it: Time spent putting together a solid business plan is time well spent. In fact, the more time you spend, the better prepared you’ll be. But don’t be overwhelmed at the prospect. The basic components of a business plan are fairly simple.
(Source: By Steven D. Peterson, Peter E. Jaret, and Barbara Findlay Schenck from Business Plans Kit For Dummies, 4th Edition)