Whether your business is starting up, considering expansion, or planning for the future, a solid business plan is an essential aspect of your operations. It’s so important that, without one, you could be missing out on funding opportunities and profits.
A recent report found that, of small businesses operating with a business plan, 70% were profitable, compared to only 52% of businesses that did not operate with a plan in place. The reason many businesses said they didn’t have a plan? “I don’t see the need” topped the list, garnering 68% of those responses; “I don’t have the time” was another reason small business owners haven’t developed a plan.
If your small business falls within that category—no business plan in place because you don’t see the need—consider this: writing a business plan helps you…
- Identify your target customers and why they want to buy from you, rather than your competitors
- Monitor progress, hold yourself accountable, and control the business’s fate
- Plan your business finances and future, through revenue and profit projections, as well as a solid go-to-market strategy
Small business owners are notoriously busy people, burning the candle at both ends in order to keep customers happy, employees engaged, and innovations on the horizon. So it makes sense when you hear small business owners lament a lack of time as an obstacle to planning. However, “Plans today no longer need the 20 to 40 pages prescribed by classic planners,” according to William Bygrave, a professor emeritus at Babson College and longtime entrepreneurship researcher. The prospect of writing a business plan within those parameters should seem much more doable, even for the busiest small business owner.
Business Plans Pave the Way toward Planning for Your Financial Future
Whether your business is starting up, considering expansion, or looking to raise funds, a solid business plan is an essential aspect of your operations. According to the Wall Street Journal, one of the main reasons businesses struggle is a lack of capital. Creating a plan will help you identify how much capital you’ll need and from where it will come. If you’re considering traditional banks, investors, or venture capitalists as sources of cash for your business, they all will expect to see your business plan before giving you any cash.
Alternative lenders such as credit cards and merchant cash advance companies do not require a business plan, but you will want to create a plan that accounts for these resources as part of your overall financial and growth strategies. That is, while the economy continues to improve, lending to small businesses has still not fully recovered, and when loans are available, lenders’ requirements are stricter than ever, thus shifting many business owners’ priorities toward alternative financing arrangements. When these agreements are included with your business plan, you’re in a much better position to plan for your financial future and build a successful enterprise.