Advantages of having a business plan

By Charles Hopkins Published 04/7/2006 | Business and Finance

The advantages of having a business plan need not be overstressed. It is a key document, a blueprint for success. It not only charts out the path that the company needs to adopt but also looks at the market conditions, state of competition, and strategies to be adopted.

Most people shy away from business plans because they find it hard to forecast how the market will move. This is a big mistake. You cant build a company today unless you plan for tomorrow. This is where the inherent strength of a business plan lies. It makes you look at tomorrow, and tells you how to get ready for it.

Planning can help you anticipate problems that are likely to arise in future, and you can work out a response. You dont have to scramble for last minute, quick fix solutions. Like a visionary, you can see the problem coming, and be ready for it.

Business plans are also essential for start-ups that need loans or investments. They help the financier assess the revenue model, and how the company plans to achieve its goals.  

They lay down in great detail the reasons why a start up is likely to succeed.

However, these plans only outline a concept. Operational plans focus on results. They inform each person in the business of what he or she must achieve to contribute to the success of the company. This focus on results can help a business to move from where it is, to the place its managers, investors and owners want it to be.

Start-ups that dont have a definite direction are the ones that usually fail. They need a plan to target customers, build new distribution channels, come up with innovative pricing or tap new markets.

The business plans also need to lay down clear goals. These are targets that need to be achieved across a fixed period of time. Managers of small businesses often feel that they know everything about their work and dont need to make a plan. They may not always be right. They may, at times, find themselves is situations where they dont know how to respond. Then they may start hitting panic buttons. But it may be too late for the cause of the company.

It is difficult for someone who is managing a small business to honestly determine the actual position of the business, in terms of strengths and weaknesses, viability, market position, product line, capital adequacy, etc. A business plan can help them do this.

So, if you dont have a business plan, draw it today. It will change the growth path of your company.