Business planning is an ongoing activity. Whether you're looking to start a business or expand your enterprise, business plans are essential tools for managing and growing your business.
The link between business planning and business success is no secret and has been spoken about by industry experts for years. CJ Johnson, an SBDC Business Advisor-Funding Specialist, recently said, "Successful business owners are proactive and intentional when it comes to their growth."¹
Yet, 23% of businesses don't have a business plan according to Barclays Bank.² Research has found that companies that plan, grow faster and some of the fastest-growing companies have one thing in common – business plans.³
Business, financial and marketing plans are an integral part of the strategic processes that ensure your business achieves the results you want. Trying to build a business without a plan is like jumping into a car and driving to a location you don't know how to reach. The chances of getting there are slim!
What is the purpose of a business plan?
Your business plan is a map of what you need to do to get where you want to be. When facing so much uncertainty, your business plan helps you navigate the rough waters. In the face of so much uncertainty, your business plan acts as your guide to success, navigating any rough waters you face.
A business plan helps you:
- Clarify your business idea
- Identify roadblocks
- Define SMART goals
- Map out strategies for success
- Measure business growth
- Establish financial forecasts
📖 Related Story: What can a Diploma of Business do for your Career?
Why should I make a business plan?
Here are ten reasons a business plan is vital for any small business:
- It forces you to think through everything
The planning process will force you to answer questions that you may not have thought about before. You will need to articulate your ideas about your target customers, your products and services and other aspects of your business.
- It creates a list of SMART goals
Creating a business plan transforms your vision into reality using SMART - Specific, Measurable, Achievable, Relevant, and Time-Bound Goals. This will help you create real targets that you can work towards.
- Develops a motivated mindset
Many people can feel stuck or overwhelmed when trying to start a business - so much to do, so many questions to answer! A business plan can help combat these feelings as it will break down and prioritize the tasks that need to be completed.
- Attracts investors
If, at some point, you need finance and wish to seek funding from investors, your business plan can be the key to achieving this. Investors want to see a credible, well-advised business plan that demonstrates the likelihood of your business succeeding.
- It puts everyone on the same page
Having a solid business plan ensures everyone who is a part of your business is on the same page and is moving in the same direction.
If the business owner does not have a clear idea of how the business will operate, others won’t either and things may start to fall off track.
- Learn to budget and understand your finances
Part of developing a business plan is creating a budget and forecast. Budgeting, in particular, is crucial for small businesses that often operate on a small budget. With a limited amount of startup capital, you must manage your money well and plan for a stable financial future.
- Become proactive, not reactive
Far too many business owners chase their tails, putting one fire out after another. The strategies, tactics, action plans, and budgets outlined in your business plan will help you navigate foreseeable roadblocks. No unwelcome surprises.
- Staying accountable with your goals
Having a business plan will hold you and your team accountable. Have you achieved the goals outlined in your plan? Why / Why not?
The review process for small businesses typically occurs quarterly. Management will meet to discuss the current business environment, real or potential roadblocks and steps to ensure progress continues.
- Know your customer
Understanding your customer can make a world of difference. The more you know about your target market, the better you can communicate with them.
You will save on marketing costs and receive a greater return on investments when you know your target customers and how best to reach them.
- Understand your competition better
No matter your industry, your business will always have competition. Understanding what differentiates your business from others will help you stand out from the competition.
Finding out what your competitive advantage is, is a critical component in your business plan. A SWOT (strengths, weaknesses, opportunities, and threats) analysis is a strategic planning tool that helps pinpoint and understand your business's strengths, weaknesses, opportunities, and threats.
If you take anything away from this article, just remember: planning is the key to success. If you know where you're going and how you'll get there, the process will become easier. But if you don't, you might end up somewhere else and somewhere you didn't want to be.
Not 100% sure you will be able to create a startup successfully?
We offer accredited small business training that can help turn your business idea into reality. Sarina Russo Entrepreneurs (SRE), in conjunction with The Self-Employment Assistance program (previously New Business Assistance with NEIS), enables Australians to set up and run their own small business. The Self-Employment Assistance is 100% Australian Government funded.
Sarina Russo Entrepreneurs (SRE) supports candidates as they complete BSB40320 Certificate IV in Entrepreneurship and New Business. During this, candidates create a comprehensive business plan and a two-year financial cash forecast. SRE Trainers provide meaningful mentoring for the first twelve months.
Eligible candidates receive the training and support to create a viable business plan, in addition to obtaining a Certificate IV in New Small Business.
For more information, please click here.
[1] Think And Grow Big: 13 Small Business Experts Share Strategies For Maximum Growth, Retrieved on 23 September 2021 from https://www.forbes.com/sites/allbusiness/2020/03/30/business-experts-share-strategies-for-maximum-growth/?sh=2fdafb615f61
[2] 1 in 4 UK SMEs don’t use a business plan, Retrieved on 24 September 2021 from https://www.talk-business.co.uk/2015/01/29/1-4-uk-smes-dont-use-business-plan/?_gl=1*a1r9ek*_ga*MTUzMzQ5NDI1Ny4xNjMyNDU0NDg2*_ga_N0V23L0VEC*MTYzMjQ1NDQ4Ni4xLjAuMTYzMjQ1NDQ5NS4w
[3] Do You Need a Business Plan? Scientific Research Says Yes, Retrieved on 27 August 2021 from https://articles.bplans.com/do-you-need-a-business-plan-scientific-research-says-yes/
