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Why Your Business Needs a Business Plan

1. There is something to be said for acting proactively. Frequently, business managers tend to “put out fires” as problems arise—especially in small companies. Committing a business plan to paper requires a great deal of discipline, but going through the process is worth it. For example, a hastily conceived plan of action will not look as attractive when you see it in black and white.

2. A business plan can help tell you where you are, where you are going and how to get there. Of course, the plan does not have to be written in stone (nor should it be). For instance, new developments may require some slight deviations from your original plan. However, your business decisions probably will be more solid if they are made within the context of the original plan. If something is way off base, it should raise suspicions.

3. The planning process can help improve communication in at least two ways. First, it forces you to crystallize your vision of the company. Second, it encourages feedback from key players who become involved with the planning. This kind of dialogue may be particularly vital in small firms. Reason: The employees have a chance to “give and take” with the top business managers.

4. The existence of a business plan may give you instant credibility in the business world. It can be especially impressive to creditors and the lending officers of the banks that you deal with. And it may satisfy a psychological need for you and your company to be taken seriously.

5. You can use your business plan to help raise capital for the company. For instance, by focusing on accounts receivables in your business plan, you may be able to free up additional funds. Also, it is likely that a lender will require you to present a business plan plus cash projections to obtain a loan.

How do you put together a business plan? In general, most plans include: a statement of objectives, strengths and weaknesses, position in the marketplace, future direction, critical issues and so forth.

Generally, it helps to get a professional's input. However, there is no magic formula. It's your plan, so you can shape it into a format that seems right for you. In fact, you probably will make changes in the plan's format from year to year. The important thing is to touch all bases that are essential to your particular industry or profession.

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	[ return to list ] Why Your Business Needs a Business Plan 1. There is something to be said for acting proactively. Frequently, business managers tend to “put out fires” as problems arise—especially in small companies. Committing a business plan to paper requires a great deal of discipline, but going through the process is worth it. For example, a hastily conceived plan of action will not look as attractive when you see it in black and white. 2. A business plan can help tell you where you are, where you are going and how to get there. Of course, the plan does not have to be written in stone (nor should it be). For instance, new developments may require some slight deviations from your original plan. However, your business decisions probably will be more solid if they are made within the context of the original plan. If something is way off base, it should raise suspicions. 3. The planning process can help improve communication in at least two ways. First, it forces you to crystallize your vision of the company. Second, it encourages feedback from key players who become involved with the planning. This kind of dialogue may be particularly vital in small firms. Reason: The employees have a chance to “give and take” with the top business managers. 4. The existence of a business plan may give you instant credibility in the business world. It can be especially impressive to creditors and the lending officers of the banks that you deal with. And it may satisfy a psychological need for you and your company to be taken seriously. 5. You can use your business plan to help raise capital for the company. For instance, by focusing on accounts receivables in your business plan, you may be able to free up additional funds. Also, it is likely that a lender will require you to present a business plan plus cash projections to obtain a loan. How do you put together a business plan? In general, most plans include: a statement of objectives, strengths and weaknesses, position in the marketplace, future direction, critical issues and so forth. Generally, it helps to get a professional's input. However, there is no magic formula. It's your plan, so you can shape it into a format that seems right for you. In fact, you probably will make changes in the plan's format from year to year. The important thing is to touch all bases that are essential to your particular industry or profession. [ return to list ]
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