For this month’s blog we are focusing on the importance of developing and maintaining a business plan. Most new business owners think that a business plan is just a necessary part of obtaining funding from a lender, and while that is true, business plans should be so much more than that. A well-researched and thought-out plan should be a vital part of your business’s growth strategy and a living document that you review at least annually as your business develops.

Business plans are an important and strategic tool when starting a business for several reasons, and we are going to outline ten of them here. Developing a business plan will:

1. Help to plot your course and focus your efforts. A business plan acts like a roadmap of where you want your business to go. It provides direction and a path of operation. It allows you to see down the road to your long-terms strategies while hitting short term goals along the way.

2. Prove your commitment to your business. Investors, potential partners, and employees all want to know that you are invested in and committed to the success of the business. Spending the time to research and develop a thorough business plan is one way of demonstrating this commitment. 

3. Establish company goals and milestones. The business plan should clearly define the short- and long-term goals you want to accomplish. These goals should be significant, measurable, and attainable.

4. Force you to research and really know your market. What are the opportunities and threats to your industry? Is your industry growing or declining? What is the short- and long-term outlook for the industry? This deep industry knowledge is invaluable and will help you make decisions to improve your market position. 

5. Provide information on your revenue model. How will your business make money? This is a critical question to answer in writing for yourself and potential investors. Documenting the revenue model helps to address challenges and assumptions associated with the model.

6. Allow you to better understand your competition and customers. Every business has competitors; either directly or indirectly and you need to analyze the competition in order to understand your company’s competitive advantage. Customers are critical to the success of any business and must be studied and understood. Why do they buy? When do they buy? Understanding your customer will allow you to create the right products and services and sell them cost-effectively.

7. Ensure you document your marketing plan. How will you reach your target customer? What is your advertising budget? What distribution channels will work best for your business? A formal marketing plan is essential to the growth of a business and your marketing plan will evolve so your plan should be revisited at least annually.

8. Assist you in determining your financial needs and start up costs. Developing a business plan will provide you with insight on the financial needs of your business. For example, during your research you may come across equipment or expenses that you hadn’t thought of that could increase your expenses. In addition, lenders and investors will expect a detail list of how their funds will be utilized.

9. Attract investors. Your business plan will be the basis for financing proposals. Anyone interested in investing in your business will want to see a thorough and well documented business plan. They will look for answers to questions like: What are the financial projections? What is the company’s exit strategy? Is there are need for this product or service? 

10. Determine, understand, and forecast staffing needs. What will the organizational makeup of your business be? How many employees are needed? These and other questions can be answered in the business plan.

These ten reasons highlight just some of the ways in which a business plan will help make your business successful and why they are so important.

When formulating your business plan, most of the time  is spent researching and thinking about how you want your business to operate before you even put your ideas down on paper. A quick internet search for business plan template can get you started, however below is a link to the business plan template used by our Business Resource Manager with her clients.

https://www.score.org/resource/business-plan-template-startup-business