Importance Of Business Plan
Do you need a business plan, really? Is the time and money spent worth it? Should you not just wing it over and miss the whole planning process?
Very good questions. Here's what you need to remember.
1. If you are looking for a loan or investment it is necessary
If you are applying for financing from a bank, angel investor or venture capitalist, they may want to know you have a clear handle on the future of your small company.
You don't have to write a 200-page paper, but you'll need something to hand over to your banker or investor that demonstrates your company solves a problem market and contains your key financial statements and predictions.
Your business plan should make comprehension of your business model and financials easy for future investors and supporters of all kinds. It's even cooler when you can visually view data through charts and graphs.
icpl makes things simpler by going through the process of setting up and predicting your financials step-by - step — without complex spreadsheets — so that you can present your figures with confidence that you have put them together properly. It will also automatically generate all the charts and graphs you need so you can generate an inspiring plan, even if you've never done it before.
2. It has been shown that business planning helps you grow 30 per cent faster
Writing a business plan is not about making a paper that forecasts the company's future with accuracy. The method of composing your plan is what matters. Writing your plan frequently and updating it gives you a deeper look at what you need to do to meet your goals and be successful.
Business planning is about setting targets on a regular basis, monitoring your progress towards those goals and making adjustments as you learn more about your customers.
You don't just need to take our word for this. Studies have shown that businesses that frequently prepare and analyse their performance often expand 30 per cent faster. Research also shows, over and above rapid growth, that companies that prepare are actually doing well. They are less likely to become one of those failing company figures or face cash flow problems that threaten to shut them down.
3. Confidently you will make big spending decisions
As your company expands, some of the best challenges you'll have are finding out when to recruit new staff, when to expand to a new location, or whether you're able to afford a big buy.
These are big spending decisions and if you revisit the predictions that you set out in your business plan on a regular basis, you will have more knowledge to use to make your choices.
4. More likely you will spot crucial cash flow issues early
The other side of those big investment decisions is knowing and tracking the cash flow of your company. Your cash flow statement is one of three main financial statements you and your business manager would bring together. (The other two are your income statement (P&L) and your balance sheet.
As part of your business plan analysis, updating your cash flow statement periodically will help you identify your cash flow issues sooner so you can take steps to prevent a cash crunch where you can't pay your bills.
Library with free sample business plan
5. A business strategy minimises the risk you face
There's so much you don't realise when you're just starting out — about your clients, your competition and even operations.
As a business owner, when you started your company, you signed up for some of the uncertainty but there's a lot you can do to your your risk. Regularly designing and updating your business plan is a great way to discover your weak spots — the shortcomings, holes, and theories you've made — and to build contingency plans.
When you link an accounting tool like QuickBooks or Xero, icpl makes it easy to compare your actuals against your forecasts. icpl feeds into real-time actuals automatically, so you don't have to wrangle spreadsheets — or worse — do manual data entry to see your financial results.
From there, as you learn what works and what doesn't, you can easily change your predictions and make changes in your company (marketing, promotional strategies, production, inventories).
6. It is a good base for strategic planning, goal making
Your financial plan is a perfect place to map how your revenue and earnings expectations suit your investment budget. Creating a clear correlation between what you're investing in and the outcomes you 're looking to achieve will help make sure you 're setting yourself up for success.
A strategic strategy encourages having everybody on the same page in your team. In clear words, you'll be able to explain how you think you'll be going from here to there.
Rallying your team around the same goals will boost your overall performance. You want everyone in your team to see the big picture and appreciate the bigger objectives. You need their buy-in from the start and you want to make it easy to track and connect on your progress as you progress.
If everyone in your team knows how their piece of work affects the greater business, the more they will be involved in achieving the goals, and they will really feel their part of the work is important.
icpl creates digestible updates that you can share with your team , allowing them to see how things are going. This kind of clarity lets you prepare and prioritise, connecting the dots between the operational job and its effect on your profits.
7. It will allow you to set realistic targets and milestones
Each successful business plan outlines expectations and goals for SMART. SMART priorities are:
Specifically
Tailored
Possible
Linked
Temporary
It is a lot less useful if you build a business plan but miss adding any targets or objectives to it. If you set targets and objectives that are not consistent with the vision you outlined in your business plan for your organisation and your staff, you'll find it hard to coordinate your staff with the same priorities.
Using your business plan to set targets of high quality. Then use these targets to set realistic goals and direct the plans for sales and marketing.
8. If you ever intend to sell, your business plan is an asset
You can plan to sell your business down the road, or to position yourself for acquisition. Getting a good business plan will help you justify a higher valuation. If it's easy for them to grasp your business model, your target market and your overall ability to expand and scale, your company is likely to be worth more to a buyer.
Getting Underway
The value of creating and updating a business plan periodically goes far further than just preparing and setting targets. The trick is to just take off. It is not really as hard as you would imagine! It doesn't have to be a structured business plan which is 200 pages long, or even 20, and you don't have to spend months on it.
A business plan can also be produced in under an hour. And there are plenty of tools available to promote that. Download our free business plan template, and get the inspiration for a free sample business plan.
Check out ICPL for tips along the way, videos, and educational material that will help you build your business plan.
The interactive prototype from ICPL will guide you through the planning process step by step. You'll go from blueprint to full business plan in no time with intuitive fill-in-the-blank inputs, quick but efficient financial forecasting, and beautiful business plans that impress investors.
ICPL takes the pressure out of the whole business planning process , helping you keep track of your success as you develop, describing the tasks you need to get your company to the next level and even making it easier to measure your plan against the competition.
Very good questions. Here's what you need to remember.
1. If you are looking for a loan or investment it is necessary
If you are applying for financing from a bank, angel investor or venture capitalist, they may want to know you have a clear handle on the future of your small company.
You don't have to write a 200-page paper, but you'll need something to hand over to your banker or investor that demonstrates your company solves a problem market and contains your key financial statements and predictions.
Your business plan should make comprehension of your business model and financials easy for future investors and supporters of all kinds. It's even cooler when you can visually view data through charts and graphs.
icpl makes things simpler by going through the process of setting up and predicting your financials step-by - step — without complex spreadsheets — so that you can present your figures with confidence that you have put them together properly. It will also automatically generate all the charts and graphs you need so you can generate an inspiring plan, even if you've never done it before.
2. It has been shown that business planning helps you grow 30 per cent faster
Writing a business plan is not about making a paper that forecasts the company's future with accuracy. The method of composing your plan is what matters. Writing your plan frequently and updating it gives you a deeper look at what you need to do to meet your goals and be successful.
Business planning is about setting targets on a regular basis, monitoring your progress towards those goals and making adjustments as you learn more about your customers.
You don't just need to take our word for this. Studies have shown that businesses that frequently prepare and analyse their performance often expand 30 per cent faster. Research also shows, over and above rapid growth, that companies that prepare are actually doing well. They are less likely to become one of those failing company figures or face cash flow problems that threaten to shut them down.
3. Confidently you will make big spending decisions
As your company expands, some of the best challenges you'll have are finding out when to recruit new staff, when to expand to a new location, or whether you're able to afford a big buy.
These are big spending decisions and if you revisit the predictions that you set out in your business plan on a regular basis, you will have more knowledge to use to make your choices.
4. More likely you will spot crucial cash flow issues early
The other side of those big investment decisions is knowing and tracking the cash flow of your company. Your cash flow statement is one of three main financial statements you and your business manager would bring together. (The other two are your income statement (P&L) and your balance sheet.
As part of your business plan analysis, updating your cash flow statement periodically will help you identify your cash flow issues sooner so you can take steps to prevent a cash crunch where you can't pay your bills.
Library with free sample business plan
5. A business strategy minimises the risk you face
There's so much you don't realise when you're just starting out — about your clients, your competition and even operations.
As a business owner, when you started your company, you signed up for some of the uncertainty but there's a lot you can do to your your risk. Regularly designing and updating your business plan is a great way to discover your weak spots — the shortcomings, holes, and theories you've made — and to build contingency plans.
When you link an accounting tool like QuickBooks or Xero, icpl makes it easy to compare your actuals against your forecasts. icpl feeds into real-time actuals automatically, so you don't have to wrangle spreadsheets — or worse — do manual data entry to see your financial results.
From there, as you learn what works and what doesn't, you can easily change your predictions and make changes in your company (marketing, promotional strategies, production, inventories).
6. It is a good base for strategic planning, goal making
Your financial plan is a perfect place to map how your revenue and earnings expectations suit your investment budget. Creating a clear correlation between what you're investing in and the outcomes you 're looking to achieve will help make sure you 're setting yourself up for success.
A strategic strategy encourages having everybody on the same page in your team. In clear words, you'll be able to explain how you think you'll be going from here to there.
Rallying your team around the same goals will boost your overall performance. You want everyone in your team to see the big picture and appreciate the bigger objectives. You need their buy-in from the start and you want to make it easy to track and connect on your progress as you progress.
If everyone in your team knows how their piece of work affects the greater business, the more they will be involved in achieving the goals, and they will really feel their part of the work is important.
icpl creates digestible updates that you can share with your team , allowing them to see how things are going. This kind of clarity lets you prepare and prioritise, connecting the dots between the operational job and its effect on your profits.
7. It will allow you to set realistic targets and milestones
Each successful business plan outlines expectations and goals for SMART. SMART priorities are:
Specifically
Tailored
Possible
Linked
Temporary
It is a lot less useful if you build a business plan but miss adding any targets or objectives to it. If you set targets and objectives that are not consistent with the vision you outlined in your business plan for your organisation and your staff, you'll find it hard to coordinate your staff with the same priorities.
Using your business plan to set targets of high quality. Then use these targets to set realistic goals and direct the plans for sales and marketing.
8. If you ever intend to sell, your business plan is an asset
You can plan to sell your business down the road, or to position yourself for acquisition. Getting a good business plan will help you justify a higher valuation. If it's easy for them to grasp your business model, your target market and your overall ability to expand and scale, your company is likely to be worth more to a buyer.
Getting Underway
The value of creating and updating a business plan periodically goes far further than just preparing and setting targets. The trick is to just take off. It is not really as hard as you would imagine! It doesn't have to be a structured business plan which is 200 pages long, or even 20, and you don't have to spend months on it.
A business plan can also be produced in under an hour. And there are plenty of tools available to promote that. Download our free business plan template, and get the inspiration for a free sample business plan.
Check out ICPL for tips along the way, videos, and educational material that will help you build your business plan.
The interactive prototype from ICPL will guide you through the planning process step by step. You'll go from blueprint to full business plan in no time with intuitive fill-in-the-blank inputs, quick but efficient financial forecasting, and beautiful business plans that impress investors.
ICPL takes the pressure out of the whole business planning process , helping you keep track of your success as you develop, describing the tasks you need to get your company to the next level and even making it easier to measure your plan against the competition.
