Business plans are documents used for planning out details about your business. They can range in size from a simple few sentences to more than 100 pages with formal sections comprising a table of contents and a title page. A complete business plans should have three sections which include the business concept, marketplace and financial, these three sections are broken down into seven components which include the overview or summary of the plan, a description of the business, market strategies, competition analysis, design and development, operations and management, and financial information. Even a small one-page business plan must have importance and purpose for the success of the business. However, without a plan a business is largely rudderless, and everyday activities are likely to be haphazard and reactive, in absolute difference to those businesses implementing a well thought out business plan.
Below are the three reasons why you need a business plan:
1. Clarity of thought – The number one motive of a business plan is to define what the business is or what it intends to be over time. Clarifying the purpose and direction of your business let you understand what needs to be done for forward movement. By committing your thoughts to paper, you can understand your business better and also chart certain courses of action that need to be taken to improve your business. A business plan can detail alternative future scenarios and set certain objectives and goals along with the resources required to acquire these goals.
2. A blue print to success –An effective business plan gives you insight of what to do, when to do it and how to handle it. An effective business plan is like a pathway that leads you to success and make you control the market. Businesses develop and adjust with time and factoring a blueprint to future growth and direction into the business plan can be an effective way to plan for changes in the market growing or slowing trends, and new innovations or directions to take as the company grows. Although clarity of thought in the business plan lets you know where you’re starting, the blueprint allow you to duplicate successes achieved and how it is achieved for future purposes.
3. Attract support – Most businesses face investment decisions during the course of their lifetime. Often, these chances cannot be funded alone by free cash flows, so the business must try to seek external funding. However, despite the fact that the market for funding is highly competitive, all potential lenders will demand access to the company’s recent Income, Profit and Loss Statements, together with an updated business plan. In essence the former helps investors apprehend the past, whereas the business plan helps give them a window on the future.
When in search of investment for your business, it is vital to clearly describe the opportunity, as investors will want to know:
- Why they would be better off investing in your business, instead of leaving money in a bank account or investing in another business?
- What the Unique Selling Proposition (USP) for the business emerging from the opportunity is?
- Why people will decide to part with their cash to buy from your business?
A comprehensive well-written business plan can help you convey these points to potential investors, giving them confident in you and in the thoroughness with which you have considered and analyze future eventualities. The most important component for them will be clear evidence of the company’s future ability to generate sufficient cash flows to meet debt obligations, while enabling the business to operate effectively.
If you need help with your business plan give us call on 713-344-1761 or in the UK 07708467383