Do you really require a business plan? Do you think it’s worth the cost of time and money? Why don’t you just go with the flow and not bother with the entire plan?
Good questions. Here’s all you need to be aware of.
1. It’s vital if you’re in the market for a loan or investment
If you’re looking to ask an angel investor, a bank, or a venture capitalist for financing, they’ll be interested to know if you’ve got the right perspective of your small business’s growth.
It’s not necessary to write a 200-page paper but you’ll require something to present to your investor or banker which proves that there’s an audience for the issue your company is solving and contains your most important financial statements as well as forecasts.
Your business plan must be easy for potential investors and other supporters of all types to comprehend your business’s model and financials. It’s also helpful if you’re proficient in presenting information visually via graphs and charts.
LivePlan simplifies this process by guiding you step-by-step through the procedure of creating and forecasting your financials without the need for complicated spreadsheets. This means it’s possible to present your figures with confidence that you’ve put them all together properly. LivePlan can even generate all the graphs and charts that you require automatically, so you can make an impressive strategy, even if not done it before.
2. Business planning has been proven to boost your business by 30 percent more quickly
A business plan isn’t just about creating documents that accurately forecast the future direction of your business. The method of creating your plan is the most important thing. The process of writing your plan and then checking it frequently provides you with a greater insight into what you have to accomplish to reach your goals and achieve success.
Business planning involves consistently creating goals, tracking the progress you make towards these goals, and then making adjustments to your company as you gain more information about your clients.
It’s not necessary to accept our word as gospel. Research has proven that businesses who plan and analyze their performance regularly improve their performance by 30 percent. Beyond that research has also shown that businesses that plan do better. They are less likely to be one of those horrifying figures on companies that fail, or have cash flow problems that could shut them down.
3. You’ll be able to make important purchases with confidence
If your business expands and expands, the most difficult problems you’ll face are finding out the best time to employ new employees, the best time you should expand to a different site, or whether you’re able to afford a large purchase.
These are important decision-making processes, and if you’re reviewing the forecasts you created on your company plan you’ll be able to have more information you can make decisions.
4. It is more likely that you will spot crucial cash flow issues earlier.
The other aspect of making that important spending decision is understanding and monitoring the cash flow of your business. The statements on cash flows are among the three financial statements that you’ll prepare as part of the business strategy. (The others are the balance sheets and revenue statements (P&L).
Checking your cash flow statements frequently as part of your review of your business plan will allow you to identify possible cash flow problems earlier, so you can prepare to avoid the possibility of a cash shortage that means you’re unable to pay your expenses.
5. A business plan can reduce your chance of failure
If you’re just beginning your journey there’s a lot that you don’t understand about your clients, your competitors as well as your operations.
If you’re a business owner, you’ve signed up for a bit of uncertainty when you began your venture However, there’s a lot that you could do in order to lessen the chance of being in danger. Making and reviewing your business plan on a regular basis is an excellent way to identify the weaknesses in your plan, the gaps, and the assumptions you’ve made. You can also create contingency plans.
LivePlan allows you to examine your actuals and projections when you connect to accounting software such as QuickBooks and Xero. LivePlan automates the process of bringing real-time data so that you don’t have to fiddle with spreadsheets, or even manually enter data to view your financial performance.
Then, you’ll be able to effortlessly adjust your forecasts, and make changes to your business (marketing sales strategies production inventory) as you discover which strategies work and which don’t.
6. It’s an excellent foundation for strategic planning, prioritization, and planning
A business’s plan of action is a good way to determine how your revenue and sales objectives are aligned with your expenses budget. Making a clear distinction between what you’re investing in and the results you’d like to see ensures that you’re preparing yourself to be successful.
A business plan will make it simpler to bring everyone in your team in the same boat. You’ll be able to outline clearly what you expect to achieve across the finish line.
Affirming that your team is aligned toward the same goals can improve your efficiency overall. Everyone in your team to be aware of the big picture and be aware of the bigger picture. They must be involved right from the beginning. And as you grow you’ll want to make it easy for them to track and share your performance.
If everyone in your team understands what their part of the work is affecting the bigger organization, the more involved they’ll be in achieving your objectives because they’ll be aware that what they’re doing is important.
LivePlan creates digestible reports you can distribute to your team members, so they will be able to see how the process is actually progressing. This transparency can help everyone prioritize and plan and connect the dots between the work that is tactical and the effect it has on your business’s revenue.
7. It can help you establish targets that are achievable and meet milestones
Every business plan that is successful outlines SMART targets and objectives. The SMART goals are:
If you make the business plan, but you don’t attach any milestones or goals with it, then it’s less valuable. If you establish targets and deadlines for your organization and your team that isn’t in line with the plan you outlined within your plan of business, you’re bound to have a tough time making sure your team is aligned around the same objectives.
Make use of your plan for the business to define important milestones at a high level. Use the milestones you set to establish important goals and guide your marketing and sales strategies.
8. Your business plan can be an asset in the event that you decide to sell your business
In the future, you could decide you’d like to sell your company or position yourself to acquire. The existence of a well-constructed business plan will assist you in making the case for a better value. Your company is more likely to be more valuable to potential buyers in the event that they’re able to comprehend your business’s strategy, your market, and the potential to expand and grow.
How to start?
It is crucial to have a plan for your business and revisiting it frequently isn’t just about simply setting goals and planning. The most important thing is to start. It’s not as difficult as you imagine! It doesn’t need to be an official business plan of 200 pages or more, and it doesn’t require months of working on it.