Do Small Businesses Need a Business Plan?
As a small business, there will be many factors to running a business that swallows time and effort. Sorting these into priority order is essential so where should your business plan come on the list? Many business experts argue it should be in the top slot.
1 Provides a map
A business plan is a narrative journey from the beginning to a certain point in time. Just before you reach this point, you’ll review your journey thus far and create a new map for the future. This is a perpetual motion that drives your business forward.
As a small business, there are times when things can feel a ‘lost’. This may be because you’ve lost the focus on your next milestone. Your business plan will pull you back on track.
2 Provides solutions before the problems arise
The writing of a business plan hones your thinking of not just where you want to be and when, but how. It also gives you to vision to spot potential problems and, more importantly, what solutions you can have waiting in the wings should these issues arise.
A business plan is an objective narrative of your business and the potential problems it faces.
3 It acts as a measuring tool
Many startups are created and run by entrepreneurs who, to pay the bills, work another job. There are other obligations in life too which means that at times, the time, energy and effort you give your fledgeling business is limited.
Three months down the line and your business won’t be where you want it to be. It can feel disheartening. Rather than drifting, your business plan acts as a measuring tool by keeping you accountable.
4 It shows potential investors and collaborators how serious you are
Anyone can start a business. Whether it is driven to success or not depends on a variety of factors. The largest hurdle any new business has to overcome is financing or, more accurately, lack of finance. A stuttering, almost-non-existent cashflow will keep your business on its knees.
Getting investors inside means showing them you have a reliable business model and a firm grip of the opportunities and threats posed to your business, information that will be included in your business plan.
5 Lays out alternative routes if you need them
No one likes to think of a business failing but the truth is, the majority of new businesses do. Again, there are many reasons why from not identifying their niche market to running out of cash.
It could also be that where a business plan is lacking, looking for alternative routes to secure a place in the market doesn’t happen. A business plan effectively holds up a magnifying glass allowing you to identify plan B, plan C…
6 Provides definition
It is this magnifying ability of a business plan that makes not only an important document but an important process to go through. Defining your business, it is important in realising your business aspirations.
3 thoughts on “Do Small Businesses Need a Business Plan?”
I strongly agree with you every business person should do a plan for alternative paths so that they can secure their business and survive. Yes it is true that in new business often fallen that a loss or lost their main investment due to lack of proper business planning.
I agree too that a business plan is essential for every business no matter what their size or industry sector. Without a plan the business leaders won’t be able to drive growth and assess whether the business is being successful.
Yes I think we’re all in agreement here Ben – you have to wonder how, in practise, any business could possibly function effectively without some sort of a business plan in place.