I have always been an advocate that no matter what size of company you are – a well thought out, written and updated business plan is an essential tool, perhaps the most fundamental tool. Recently a business coaching client asked me why he even needed a business plan. It was a small company of half a dozen and the assignment was to review and revamp their marketing strategy. They were well funded and didn’t need to raise to capital. It seemed his impression was that a business plan was only used for financial reasons, attracting investors, raising money or securing a credit line from the bank.
I explained that the business plan was so much more than that, even in hiring me as a consultant, it would be so beneficial to review an existing business plan and drill straight down to the key elements. A business plan is a living, breathing document that brings all the key business elements together into a cohesive plan. It would be a stab in the dark to recommend a marketing strategy without understanding the products, the sales strategy, routes to market, competition and customers.
This is the essence of why a written, living, business plan embodies the “good stuff”; besides being helpful to consultants and advisors like me, here are my top 5 reasons:
- It gives you clarity and visibility into the “how” of your business, it allows you to share a succinct vision as well as perform a sanity check that the areas “fit” together. If you are the founder it lays out strategic and operational milestones that you can be accountable for.
- It drives the goals inside your business, whether it’s recruiting new employees, winning new customers, launching a new marketing initiative or developing new products. It provides each area of your business with a roadmap.
- The plan can be used to attract top talent, demonstrating you know where your business is and how you intend to get there. Initially and then over time it shows competence and understanding.
- It helps you gain a deep understanding of the market, your competition, emerging trends and your future customers.
- Perhaps you don’t need finance today, but one day you might, to capitalize on a new opportunity and expand into new products and markets. By keeping your business plan up to date, you can move quickly.
So thinking about your business plan as a fund-raising tool is just the beginning, it’s a blue print. You’ll use the plan for so much more, from managing you, to operating the business and getting a great view of the market. Before you chose to skip this planning document, consider all the implications and the value you might be missing.
Terry is a Dallas based consultant and business coach, with 25 years of business plan production experience he is available for short and long term business assignments globally.