Why Write a Business Plan?
There are a host of things you must do every day: you have to attend to sales, pay your bills, manage your employees…. it’s a long list. But you are not required to write a business plan. So when there isn’t time to do what you must to do, it’s understandable that planning for the business doesn’t become a priority until you are applying for a bank loan or trying to find investors. I’m going to argue that finding time to do a plan will help you and help your business.
A Business Plan is a Road Map
What is planning as it relates to a business? Simply, it is the process of determining where the business is going and assuring that you have the necessary resources to get there. It is a process which weighs the demands of today against future requirements and allows you to monitor your progress along the way. The process of setting goals and objectives, of creating the underlying blueprint which guides you toward the goals, causes you to delve into the specifics of your business, make judgments about where you want to go and how you are going to get there. That is a very important part of successfully guiding a business into the future.
But that doesn’t answer the question: Why should you do a business plan? Every day you make dozens of decisions. Some large and clearly important, some apparently small. All of them have a bearing on the direction your business will take. With a plan you can ensure that the daily decisions you make support your long term goals, Without a plan, you are on a perilous road trip without a map.
Let’s look at some common decisions:
You need someone to staff the office, do simple bookkeeping and answer the phone.
- Without a Plan: It’s a relatively straight forward hire if that’s all you are looking for. The new high school graduate with minimal skills could probably fill the slot.
- With a Plan: Next year you plan to hire an outside sales rep. The person you hire for the office will need to provide assistance to the new salesperson, process their paperwork and handle customer calls in addition to the office work. You look for someone with more experience who understands the job will grow over time.
If you hire the young person you will either have to replace them when the job expands, hire a second person or invest in training. It will cost you time and money.
You have to find a new facility.
- Without a plan: You effectively duplicate what you have because the space provides what you currently need.
- With a plan: You find a facility which will grow to serve your future plan for a showroom. Even if you aren’t able to afford the entire plant today, you can select the new place with an eye to planned expansion.
But both of the decisions assume that you know where you are going and how you will get there. It’s not enough to declare that you will have a second location unless you know how you will pay for it, staff it and what that location will contribute to the whole.
Your Co-Authors in Writing a Business Plan
Planning need not be an isolated activity. Talk with the people who know your business: your employees, your accountant, even key customers about how they see the future for your business. You may get some food for thought.
Finally, a plan makes it easier on you when you face those daily decisions. By making a plan, you have committed to a well-thought-out course of action that you believe in. As you face decisions, you will consider how they serve your goals, your future. You aren’t making them in a vacuum. And that takes a great deal of pressure off you.
I hope you are sufficiently convinced to go on to the piece on writing a plan.