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Planning without action is futile; action without planning is fatal. ~ Unknown
Benefits in Creating a Business Plan
Whether you're an entrepreneur-to-be or a flourishing business owner, the benefits of thoughtfully working through a business plan are significant.
Consider this fact. 90 percent of new businesses fail within the first five years. Of the remaining 10 percent, nine-tenths fail in the ensuing five years.
Businesses that survive, though, exemplify Charles Darwin's theory of evolution wherein the fittest species are the strongest survivors. How so? These owners have learned to respond quickly by adapting to market conditions.
They have learned to modify smartly and swiftly in staying afloat amidst swirling waters.
Through it all, your business plan is the road map providing insights on what detours to take to avoid a landslide or fallen bridge, thus guiding you from point A to point B safely and successfully.
Life is a constant flux. Everyone needs to adjust to family and community demands (to name a couple) to survive.
Why shouldn't your company be responsive to internal and external factors, too? And additionally, emerge stronger than before compared to competition?
As Darwin realized, survival of the fittest relies on a sense of purpose in achieving vibrant goals—writing a business plan does just that.
As a startup, demands on you and available resources may be minor, and you're able to file away business items in your memory box for easy recall.
However, mental faculties are finite—especially in the face of business expansion, supplier problems or equipment breakdowns. All too soon, details fade and many things become blurry in the face of stress and unmitigated demands from running a company.
That's why a business plan is essential for your company to survive. Benefits include:
1) Providing focus and clarifying actions. Especially in today's recession economy, it's important to identify a road map to chart why you're running a business, what goals to accomplish, where you're going and how to fulfill your dreams of being your own boss.
Ask yourself questions such as:
Why am I in business? To build a better mousetrap? To provide a service neglected by others? To fulfill a lifelong dream?
Where will I take my business? At the end of the year, what would I like to achieve? In three years? Five years?
2) Providing a framework for daily operations. Without blueprints for building a house, architects will not be able to communicate their vision to construction crews to build homes according to their clients' needs and specifications. So, too, building a business.
Ask questions such as:
What is the day-to-day operations plan of my bakery?
How many assistants will I need—to leaven the dough and bake, for selling at the counter and delivery persons to hotels and B&Bs (bed and breakfasts)?
Suppliers and vendors?
Frequency in placing orders to them?
How will I meet cash flow emergencies?
How am I getting the word out about our new and seasonal specialty pastries?
What will my marketing plan be?
3) Providing convincing data to support sales and profits. Banks, angel investors and venture capitalists will want to see evidence of how profitable your business is. Why? They want to be sure you're able to pay back loans from them.
Ask these questions:
How will pricing determine profits and the company's survival?
Will my prices appeal to, or drive away, customers?
Am I providing products and services that customers need and want? Or, am I making mousetraps no one wants to buy, fancy as my convertible may be?
4) Providing benchmarks to measure your company's progress and success. Unfortunately, many new owners put the cart before the horse.
They want to make huge profits with big sales. But, before profits can accrue, milestones are in order to pave the way for successful steps.
Having a business plan shows what needs to be done, and how.
Ask questions like:
How do I know my business is profitable, even though every day we're ringing up cash sales and sell out of pastries and bread?
What hidden factors impact profit?
How can I juggle it all to initially come out even, and then ahead, by parlaying sales and cash flow into profits?
Next Part 3:
How Does a Business Plan Help Your Business?
"We have been extraordinarily happy with the Business Plan Pro software and more importantly with Palo Alto Software." Read more review
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