Really need a business plan? Is it worth spending time and resources? Can't you just wing it and miss all planning?
Great questions. Here's what you need to remember.
1. It's important to pursue a loan or investment
If you're asking a bank, angel investor, or venture capitalist for money, they'll want to know you've got a clear handle on the direction of your small business.
You don't need to write a 200-page paper, but you'll need something to hand over to your banker or investor that shows your company solves a demand and includes your key financial statements and predictions.
Your business plan should allow potential investors and supporters of all kinds to understand your business model and financials. It's even easier to view data visually through charts and graphs.
LivePlan makes things simpler through going through the method of setting up and estimating your financials step-by - step — without complex spreadsheets — so you can present the figures with trust that you've placed them together correctly. It will also generate all the charts and graphs you need automatically to construct an amazing plan, even if you haven't done it before.
2. Business planning lets you grow 30 percent faster
Writing a business plan isn't about making a paper that reliably forecasts the company's future. Writing your strategy is what's important. Writing your strategy and updating it periodically gives you a clearer image of what to do to accomplish your goals and be successful.
Business planning is about setting targets periodically, monitoring your progress towards those targets, and adjusting your business as you learn more about your customers.
You don't just have to take our word. Studies have shown that businesses that frequently prepare and analyse their performance typically grow 30% faster. Beyond faster growth, research also shows improved output by companies that prepare. They're less likely to become one of those failing company statistics, or face cash flow crises that threaten to shut down.
3. You'll make major spending decisions comfortably
As your company expands, some of the best concerns you'll have are when to recruit new staff, when to expand to a new venue, or whether you can afford a big purchase.
These are big spending decisions, and if you review your business plan 's predictions regularly, you'll have more details to use to make your decisions.
4. More likely to catch critical cash flow issues early
The other side is knowing and tracking the cash flow of your company. Your cash flow statement is one of three main financial statements for your business plan. (The other two are your balance sheet and P&L statement.
As part of your business plan analysis, updating your cash flow statement periodically will help you see possible cash flow issues sooner so you can take steps to prevent a cash crunch where you can't pay your bills.
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5. Business strategy minimises the risk
When you launch, there's so much you don't know — about your clients, your competition, and even operations.
As a business owner, you signed up for some of the uncertainty when you began your business, but you can do a lot to reduce the risk. Regularly designing and updating your business plan is a great way to discover your weak spots — the shortcomings, discrepancies, and assumptions you've made — and build contingency plans.
LivePlan makes it easy to compare your actuals when you attach an accounting tool like QuickBooks or Xero. LivePlan automatically pulls real-time data so you don't have to wrangle spreadsheets — or worse — do manual data entry to see your output.
From there, you can change your predictions seamlessly and change your company (marketing, advertising strategy, production, inventory) as you understand what works and what doesn't.
6. It's a good base for strategic planning, prioritisation
Your marketing plan is a perfect way to chart how your sales and revenue targets match your budget. A strong link between what you're investing in and the outcomes you're looking to achieve will help make sure you're setting up for success.
A business plan makes things simpler for everybody on the same page. You'll be able to explain in clear terms how you think you'll get there.
Rallying your team to the same goals will increase the overall performance. You want the team to see the big picture and appreciate the bigger goals. You need their buy-in from the start, and as you advance, you want to make your advance easy to track and interact.
If everyone in the team knows how their piece of work affects the broader business, the more they will participate in achieving the goals, and they will know that their part of the work really matters.
LivePlan generates digestible updates you can share with your team, so they can see how things are going. Such openness lets everybody prepare and focus, connecting the dots between the tactical job and its effect on your profits.
7. It helps you set goals and milestones.
Any good business plan outlines SMART expectations and goals. SMART goals:
It can be calculated
Can be done
If you build a business plan, yet miss adding to it any targets or objectives, it's far less useful. If you set targets and objectives that are not consistent with the strategy you outlined in your business plan, you would find it difficult to align your team with the same expectations.
Using your strategy to set high-level goals. Use these benchmarks to build concrete targets and direct sales and marketing strategies.
8. Your business strategy is an advantage for sale
Down the road, you can plan to sell or position yourself for acquisition. Getting a good business strategy will help you advocate a higher valuation. Your company is likely to be worth more to a customer if they can easily grasp your business model, your target market, and your growth and scale potential.
How do I get started
The value of having and updating a business plan periodically goes far beyond basic preparation and goal-setting. The trick is to get started. It's not as hard as you would imagine! It doesn't have to be a detailed business plan, 200 pages long — or even 20—and you don't have to spend months on it.
In under an hour, a business plan can be made. And there's plenty of money to make things easier. Download our free business plan template and get an inspiration-free sample business plan.
See LivePlan for guides, videos, and educational material to help you build your business plan.
LivePlan 's complex template guides you through the planning phase step-by - step. With intuitive fill-in-the-blank inputs, clear but efficient financial forecasting, and beautiful business plans impressing investors, you'll quickly go from blueprint to full business plan.
LivePlan takes the pain out of the entire business planning process , helping you monitor your success as you expand, identifying the tasks you need to bring your business to the next stage, and even making it easier to evaluate your plan against the competition.