Theresa’s been saying she’ll ‘wing it’ for as long as I’ve known her – which is a long time. Exams, first dates, decorating her house, parenthood (I’ll let her have that one, there’s not much else you can do)….. So when she announced she was setting up her own business , I was more than a little nervous. You see, Theresa’s never been what you might call a ‘planner’. She just sort of, let’s things happen; goes with the flow – but being ‘easy going’ isn’t a trait you can afford to bring to the forefront when you’re a business owner.
Theresa tried, bless her, but because her whole philosophy was, ‘I’ll cross that bridge when I come to it’, she had no business plan in place at all. This meant that she placed orders late with suppliers, lost track of client orders, forgot to send invoices, didn’t keep an eye on her cash flow, and left her tax return to the last minute. She had no clear business goals or objectives in mind, she literally took one day at a time, and her business suffered. Clients lost confidence in her because of missed and moved deadlines, and eventually they dropped off altogether…God knows how much she lost in revenue by forgetting to send out invoices…she over-ordered on stock because she wasn’t keeping track of what was selling and what wasn’t…didn’t keep proper financial records…didn’t keep her social media up-to-date…and eventually had to shut up shop altogether.
When it comes to creating and maintaining a successful business, planning is everything – and that’s what Theresa was lacking; a business plan.
But what exactly does a business plan entail, and what are the benefits?
What Is A Business Plan?
It’s been said that a business plan is the ‘roadmap’ to your success, and that’s a pretty good way to look at it. It needs to give you a clear idea of all aspects of your business, including your product and service details, your marketing strategies and your finances. Businesses that have a plan grow 30% faster than those that don’t, so making one is crucial as your ‘step one’.
Once you have this ‘roadmap’ it’s important to update it annually as you grow and your goals change, taking you in new directions.
But what are the main benefits of such a plan?
1. It Will Steer You In The Right Direction
As Theresa has proven, winging your business with no clear idea of where you’re going is a recipe for disaster. A business plan is your guide to getting through each stage of your fledgling business, from structuring it in the first place and running it, to how you see it growing in the future. And it’s not as hard to do as you think.
It’s a good idea to outline the path you see your business taking within the first 3-5 years, and you should think of it as an ongoing project rather than a one-time, concrete document. If you break it down into little min-plans, for example, one for marketing and sales, one for pricing and one for operations etc, you’ll find it much more simple to follow.
2. It Could Help You To Get Funding
The way Theresa was running things, she was never going to be in a position where she could have got a bank loan or any type of investment if she’d wanted or needed it. A good business plan will give investors confidence that you know where your business is going and have ideas in place to get it there, and that chucking money your way is a smart decision.
3. It Will Help You To Reach Business Milestones
Whether you want to secure a business loan or not, a well-thought out business plan will help keep you on track and make good business decisions as you move forward. It doesn’t have to have all the answers, but it does need to serve as a guide to you reaching important business milestones.
But what are they? To put it as simply as I can, a business milestone is something significant enough to share with others. It’s highly unlikely that you’d rush home to excitedly tell your partner that you’d ordered personalised office stationery, but you’d probably share that you’d launched your website or made your first million.
4. It Shows You’re Serious About Your Business
Making a business plan shows that you’re committed to building your business – not just to yourself, but to any future employees or partners, and to investors.
5. You Can Work Out Your Financial Needs
Setting out your business plan from day dot will help you to determine how much money you need to get started and exactly where it’s going to go. This will help you to plan ahead financially – useful if you need to raise funding in the future.
Even if you are an ‘I’ll just wing it’ type of person, change the habit when it comes to your business, put a plan in place and view it regularly, and watch your business and success grow!