The most important reason to have a business plan is to define what the business is or what it wants to be over a period of time. Clarifying the direction of a business lets you understand what you need do to move forward and be successful. This clarity in a business plan can be a simple introduction and description of the company and the exact product line(s) you intend to offer your customers. A detailed description of an ideal customer will also help you improve your products in the future.
An increase in the clarity of processes achieved through a business plan makes it easy to decide whether to commit resources to new assets and capital improvements. This is particularly important for small or growing businesses with limited budgets. A business plan helps determine the right amount to allocate to such assets like software, computers, machines or vehicles. A business plan also makes it clear whether getting an extra office or workspace is feasible.
A company vision statement is an integral part of a business plan’s overview. It shows how much care and passion you have for your new venture and your customers. If you’re looking for funding, investors want to see you passionate and engaged in the business, otherwise, they may lose confidence and not invest. Vision statements should be written with a long-term perspective in mind.
With the evolution and adaption businesses undergo over time, factoring the future growth into the business plan is an effective way to plan steps for changing trends, directions and innovations as the company grows. While clarifying direction lets you find out where you are starting, future vision helps you have some goals to achieve.
Providing your stakeholders with an overview of your marketing initiatives is essential. For aspiring companies, marketing processes are inevitable parts of a business plan. It can consist of the potential marketing demographic and the goals to be achieved over a specific time period. A business plan can work as a marketing tool and include marketing strategies, market analysis, market projections, and market penetration. It will allow you to create a complete scheme and device methods to achieve the set goals.
Your business plan can be useful for acquiring funding. Whether you are looking for some finance from a bank or capital from investors, a well-designed comprehensive business plan can answer questions about the revenue generation and profitability which helps decide if potential investors should invest and how much they should invest.
Start-up’s can use their business plan with detailed plans, facts, figures and statistics to stand a better chance to attract investors that provide the necessary capital to get started. Established businesses often require money to expand, buy new equipment and property or to manage their cash flow.
An up-to-date business plan gives a better chance of getting funds you need to keep operating or expanding. Financiers and investors always consider the risks of non-repayment, so facts and figures presented in a business plan are better than word of mouth when trying to convince them to invest in your company.
A business plan can be designed to work as a sales tool to attract suppliers, partners and employees to join your business. Sharing the business plan with candidates can convince them of the business potential and encourage them to join the team. It is also important for retaining professional services like consultants, landlords, solicitors and accountants. Attracting talented people and partners is vital for any new business to succeed. Bringing in the right talent to the company is one of the parts of a business plan’s purpose.
Management and Structure
A business plan essentially conveys the organisational structure of the company including the titles and duties of directors, managers and employees. It serves as a management tool that can be used as a reference on a regular basis to ensure that the business is always in line with the sales targets, operational milestones and management goals. When used in the right way, it helps you measure your efforts and manage them to be effective and efficient.