Updated: Feb 25, 2020
Many people think business plans are just for startups, or to seek investment whether that be loans or investors. The truth is that business planning offers many benefits for every business.
A living, breathing business plan helps you grow. According to a survey conducted by the Kauffman Center for Entrepreneurial Leadership companies with a written business plan have 50% greater sales growth and 12% higher gross profit margins than those without one.
It should be pointed out what is meant by a living breathing plan. It's a plan that is live and you can adapt, update and add in 'what if' scenario's, i.e. it's a useful flexible tool that will help your business. After all there is no point in having a plan where you can't revise and add in the monthly revenue, sales figures and other key information to see whether you are on, above or below your projected (planned) targets. Any of these figures will have a bearing on how well your plan is being implemented.
So what are the top ten Business Plan benefits of having such a plan? There are actually far more than ten and you will find a link to 21 of these at the bottom of this blog.
1. Priorities will be clearer. Business planning should connect the dots in your business so you get a better picture of where you are and what you want or need to do. Strategy is supposed to relate to tactics with strategic alignment. Does that show up in your plan? Do your sales connect to your sales and marketing expenses? Are your products right for your target market? Are you covering costs including long-term fixed costs, product development, and working capital needs as well? Take a step back and look at the larger picture.
2. Strategic Focus. Startups and businesses of all sizes need to focus on their special USP's (Unique Selling Points), their target markets, and their products or services tailored to match.
3. Set priorities. You can’t do everything. Business planning helps you keep track of the right things, and focus on the most important things. Allocate your time, effort, and resources to those tasks that are going to grow your business and make it a success.
4. Manage change. With a good planning process you should regularly review assumptions, track progress, and manage new developments so you can adjust as time progresses. This will also help you avoid costly mistakes.
5. Metrics. Put your performance indicators and numbers into the business plan where you can see them. Use your business planning tool to define and track the key metrics. It's all about key performance indicators (KPI's) and numbers (targets) whether that be; sales, expenses, leads, conversion rates, margins, stock. Define and track the key metrics on a monthly basis and review against the plan. Put your performance indicators and numbers into the business plan where you can see them.
6. Develop accountability. By having a planning process and tracking results you can review regularly – spot the good and bad (plan vs. actual) and adjust either yourself or by delegating. A good planning process sets expectations and tracks results. A well-run monthly plan review becomes an impromptu review of tasks and accomplishments and it also highlights issues to be addressed. Involve your team, they are your greatest asset.
7. Manage cash flow. Poor cash flow is nine times out of ten why businesses fail. Mitigate problems and adjust; profitability, products, purchasing assets, repaying debts, bad debtors, overstocking... to name a few. Good business planning connects the dots when it comes to cash flow. Sometimes just watching profits is enough. But when sales on account, physical products, purchasing assets, or repaying debts are involved, cash flow takes planning and management. Even profitable businesses suffer when slow-paying clients or too much inventory reduces cash flow. A business plan helps you see the problems and adjust accordingly. If you have cash flow issues these can be fixed by bringing in an expert (we have improve the cash flow programmes where we can help with this).
8. Strategic alignment. Make sure your day-to-day work fits in with your business tactics which in turn matches the strategy. Alignment equals greater success. Does your day-to-day work fit with your main business tactics? Do those tactics match your strategy? If so, you have strategic alignment. If not, the business planning will bring up the mismatches.
9. Milestones. Good business planning sets milestones (goals) you can work towards. These are key goals you want to achieve, like reaching sales targets, hiring staff, or opening a new location.
10. Ensure your success. Every great business needs a great business plan. A business plan will undoubtably clarify your strategy and goals but the key to success is using your plan within your business on a constant basis building it in to your day to day activities and updating it as time progresses. All the statistics show that businesses with a comprehensive plan that is followed grow faster and make more profit. In summary ensure you have one!
As mentioned here is a link to 21 reasons why you need a business plan where you will see the argument for having a business planning process is compelling. If you want more take home pay, want more time (a planning process will through design will maximise your time efficiencies) or get the most from your team then this is the place to start.
If you would like to discuss your business planning and growth needs please contact me here. ProfitPlus are experts in helping you create business plans. We offer unique services that combine creating a business plan coupled with business coaching programmes (find the profit, cash flow...), advice, interactive software and business tools to help you through your business planning process simply and effectively. Our interactive two-day planning workshops result in an outstanding 5-year business plan, created in just two days, to help you develop and plan your business for success, giving you higher profits, more time away from the business, greater cash flow and increased value.