Writing a Business Plan: Why It Is Worth the Time and
Effort
Are you thinking about approaching a Bank for finance
to support your business? If you havent already gone to see the Manager then
you may not know that the first thing he will want to see is your Business
Plan.
Perhaps you are not convinced that all the time and
effort needed in preparing a plan is essential; if so then here are the main
benefits for both you and your business.
1. No matter how good a communicator you are, you will
never be able to convey your vision for the business as successfully as a
perfectly put together Business Plan. It provides a clear understanding as to
what you want to achieve. It allows you to express your ideas in a clearer
manner.
2. Too many times business owners try to sell their
idea verbally and at the end of the interview with the Bank the Manager is none
the wiser than he was at the start. I think you can guess the outcome of many
of those requests!
3. A Business Plan will help convince both you and the
Bank of the project’s feasibility and viability. There’s nothing like having
all the facts in front of you to clarify the key issues
4. Theres no getting away from the fact that a
business owner who plans ahead comes across as being more ambitious and more
focused. A well prepared Business Plan demonstrates you have vision and that
you know what you want
5. With numerous ideas floating around in your mind,
the pitfalls or stumbling blocks to success are never that visible. A mind
buzzing and full of ideas will rarely achieve clarity. A Business Plan forces
you to put your ideas down in writing and in an orderly manner. The result of
this could be you going in a completely different direction than you initially thought
of, or even abandoning your idea altogether. Not a pleasant thought, but which
would you prefer? The loss of your hard capital or the opportunity to re-think
your idea?
6. It is an ideal tool to monitor progress against the
objectives you have set yourself (we will cover objective setting later). By
checking progress against your Plan, you will be able to spot if you are moving
away from your original vision and so you will know what has to be put right
7. Imagine if you didn’t have this check in place; an
unnoticed change in direction or a slippage in achieving your objectives, if
left uncorrected for too long, could be fatal to your business. On the other
hand, it may transpire that a shift from your original vision could be a better
alternative, but at least recognising this change allows you to adjust your
course in a planned, structured and controlled manner
8. Every action you take has a consequence, and a Plan
helps make these consequences much clearer. Being aware of the possible effect
of your chosen direction allows you to plan ahead, leaving you better able to
cope with whatever the world of self employment can throw at you. This is one
thing that “mental planning” would not achieve
9. Putting your thoughts on paper may make you realise
that you need to do more research on the demand for your product or service. It
could also highlight that more investigation on your competitor’s products or
services is needed. Additional research could help avoid a potentially costly
mistake or even uncover a hidden advantage, which you had not seen before!
10. A Plan will guide you as to how much money is
needed to make an idea work. In your mind you may have a rough figure of what
youll have to commit, but until you do a Cash Flow Forecast you may not realise
that an overdraft limit will be required, in addition to a loan for your
equipment. If the mention of preparing a Cash Flow Forecast brings you out in a
sweat, dont worry as later in the book Ill be showing you exactly how to do one
11. A Business Plan will help you get funding. One of
the main reasons Banks turn down requests for loans is a lack of information to
assist in making an informed decision. If the Manager doesn’t have enough
knowledge about your idea or business then he won’t feel comfortable enough to
support you. He has to understand your business before he can say yes. Some
time in the future he may have to justify to his superiors why he lent you the
money, so he needs as much information as possible to back up his decision. A
Business Plan will make him feel much more at ease and so more able to say yes
12. By the time you have finished writing your
Business Plan you will have a total understanding of your business; its
strengths and weaknesses, the environment it operates in, what could potentially
go wrong, and what you can do to ensure your success. Doing your planning on
the back of an envelope is not going to achieve this
You should realise by now that it’s essential to have
a Business Plan; it could be the difference between success and that dreaded
“f” word – failure! It’s all about understanding the importance of planning
ahead.
Spend time putting your thoughts on paper in a
structured and logical manner. It will pay you dividends, both in getting the
Bank to take you seriously and securing the future of your business.