It has been said that there are two types of business entrepreneurs: Those that plan and those that fail. So do you really need a business plan? If you’re in business to succeed, YOU BET! Even having a simple business plan gives your business a road map to achieving your goals. It gives you a daily, weekly, monthly, and yearly synopsis of your business by keeping track of client activities, your expenses, and your income. Putting your plans in writing validates your business, provides insight and clarity, helps with the tracking of you business success by monitoring the activities, processes, and goals you’ve planned for yourself.
There are 5 basic reasons why you’ll want to prepare a business plan whether you are a start up or have been running a business without one:
1. Stay On Track. Having a business plan allows you to break down your goals and realize the validity of them. Your plan will accurately predict the number of prospects you need to interact with weekly, to determine how many prospects will then need to be converted to clients monthly, giving you a visual of the amount of activity that is needed to meet your sales goal. Your plan will also help you understand the value of each client, how much each client (on average) costs you to acquire and how much ROI they bring in. Example: if you are a retailer, how many customers need to walk though the door to reach the sales goal for the day? Do you average every fifth customer buys something, so that five customers walking in equals one sale? Your business plan will help you spell out these specifics and plan accordingly.
2. Bring Clarity to your goals. Define your goals and be very specific. Set your goals for 1 year out, and then go further to 5 and 10 years out. Be flexible and willing to adjust as you go. If you are a small business, your business plan should include your personal and family aspirations as well as those of the business. Because most small businesses are a family affair, you’ll want to align your personal goals and values with that of your business. It’s important that as a business owner, you don’t forget you have a life outside of business. Therefore, by aligning personal goals with your business goals, the less likely you’ll suffer from burn out and it will keep you from missed opportunities of a fulfilled life.
3. Keeping priorities in order. Your business plan should include an activity schedule, much like you may already use in planning your daily schedule. The activity schedule in your business plan, however, will help you streamline your activities; help you to manage your time more efficiently and effectively. It will help hold you accountable to timelines and schedules that are vital to business growth.
4. Know your budget. The main segment of your business plan is the budget. Once you have clarity on your goals and priorities, you will need to know what is available to you, when, and for what activity. The danger of not having a budget is that you run the risk of quickly moving though the funds available to you keep your business operational.
5. Keep track of clients. Use a Contact Management System, in other words a database, to keep track of your clients, manage their wants and needs, and when and what they last purchased from you. This data will help create a well-organized marketing plan, help with forecasting, and give you tremendous market research as you continually work to build a relationship with your clients.
Having a business plan enables you to ask very pertinent questions about yourself, your business and the business environment (your marketplace) that you are currently in. It helps you to identify all the potential risks your business can face – the “What if’s”. By identifying a business strategy ahead of time, the easier it will be to understand your direction, your budgets, schedules, and how to market to your target audience.