Here are 5 reasons you should be working on your business plan:
REASON 1: Write the vision and make it plain, so that those who see it may run with it.
Every business owner and entrepreneur has a vision for where they want to take the business or organisation they are involved in. Writing a good business plan, forces you to put your vision, mission and values on paper. The leaders of your organisation then know where you'd like to take the business, even when you are not there physically. Don't underestimate the power of vision, giving the entity a mission and values; as by expressing these 3 important building blocks of the business you are likely to attract and retain the right staff for your business; as well as the right customers.
Reason 2: Those who fail to plan, plan to fail
A wise man or women plans. So that's what the business plan is really all about. The question is when do you actually do the business plan. Do you write it after you've done market research or after you've developed a model that works which you now want to expand; or do you write it before you've even started the business. Well, who said that there should be a rule that the entire business plan must be completed at one stage. Why not start with the vision, mission and values of your business before it starts, then after researching it, put some meat to it and set up draft 1 of your business plan. You can then finalise it, once you've tested the model and you want to expand your business.
Reason 3: It forces you to look at your ideas in a more realistic manner
A business idea, is just that, a business idea. Worldwide between 80 %and 96 % of businesses fail within 10 years. Why? Because anybody can start a business in our Free market economies. However, often, those business ideas have not been tested for viability. The bottom line is, is there a market for your product, or are you able to create one? Is your product or service strong enough to take away market share from existing providers who have a head start in the market? Do you have the infrastructure (staff/personnel, physiscal infrastructure, etc) to back up your idea. Is your marketing strategy going to bring in enough sales to first hit break-even point and then a sustainable, acceptable level of profits. A good business plan tests the assumptions and numbers critically and conservatively.
Reason 4: It forces you to work on your business, not in it
By using a business plan as a working document, forces you to work on your business, and not just in it. In the e-myth book, the author explains why most business owners and even entrepreneurs end up struggling. By working on systems and on the business, and thinking like a franchisor; you are much more likely to create a business where you are not the magic of the business, but it is driven by the vision, values, mission and more importantly, systems. I believe, the best use of a business owners time should be spent on developing the culture and systems of his business, where he or she can eventually be removed from the business and it does not affect the performance of the business.
Reason 5: They need it
Prospective investors and banks require it before they give you finance or approval for projects.
There are probably another 100 reasons why you should do a business plan. If you can think of a couple send me an email and I'll include it in my next blog. Also, if you're a small business owner, let me know if business plans work for you. I would really appreciate your feedback.
Blog Post by John Volkwyn, MD of
SEDI Software and Training Specialists (Pty) Ltd.