15 Reasons You Need a Business Plan
Why do you want a business plan? You may have a list of reasons, but there may be a few other good reasons that you have not thought of. Let us take a look at some of the less obvious reasons first and finish with the ones you probably see as the most important reasons you need a business plan.
15. Set specific objectives for managers
Good management requires a business should set specific objectives and then track progress. It is surprised how many existing business owners manage without a plan. How do they establish what's supposed to happen? In truth, they really just take a short cut and plan in their head, but as a business grows it should organize and plan better, and communicate the priorities better. Be strategic. Develop a plan; don't just wing it.
14. Share your strategy, priorities and specific action points with your family
Business goes by so quickly: a rush of answering phone calls, putting out fires, etc. Don't the other people in your business life need to know what's supposed to be happening? Don't you want them to know?
13. Deal with displacement
Displacement is an important practical concept. In summary displacement theory says "What you are doing now is stopping you doing something else"
12. Decide whether or not to rent new space
Rent is a new obligation, usually a fixed cost. Do your growth prospects and plans justify taking on this increased fixed cost?
11. Hire new people
This is another new obligation (a fixed cost) that increases your risk. How will new people help your business grow and prosper? What exactly are they supposed to be doing? The rationale for hiring should be in your business plan.
10. Decide if you need new assets, how many, and whether to buy or lease them
Use your business plan to help decide what's going to happen in the long term, which should inform capital purchases.
9. Share and explain objectives with your management team and employees
Make selected portions of your business plan part of your new employee training.
8. Develop new business alliances
Use your plan to set targets for new alliances, and selected portions of your plan to communicate with those alliances.
7. Deal with professionals
Share your plans with your lawyers, bankers and accountants.
6. Sell your business
Usually the business plan is a very important part of selling the business. Help buyers understand what you have, what it's worth and why they want it.
5. Valuation of the business re divorce, inheritance and tax issues
Valuation is the term for establishing how much your business is worth. Usually that takes a business plan, as well as a professional with experience. The plan tells the valuation expert what your business is doing, when, why and how much that will cost and how much it will produce.
4. Create a new business
Use a plan to establish the right steps to starting a new business, including what you need to do, what resources will be required, and what you expect to happen.
3. Seek investment for a business, whether it's a startup or not
Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points.
2. Back up a business loan application
Like investors, lenders will want to see a plan covering the main points of the business.
1. Grow your existing business
Establish strategy and allocate resources according to strategic priority. Evaluate your opportunities and threats, consider the competition, think about where you want the business to go.
The above was developed from an article by Tim Berry