Why is a business plan so important to SMEs?12 Sep 2019
A business plan is an important tool for managing and growing your business. A well-designed plan lays out a vision of growth and the steps needed to get there. A plan is also an essential communications tool for attracting financing for your business as well as managers and staff as your business grows.
Our business consultant works with a “three pillars” theory which identifies the three crucial elements of a successful business, regardless of their size - forecasting, and management accounts, and a business plan.
In our experience, having worked with a huge number of startups and SMEs, we’ve found three things create success - good management information, a forecast to measure performance against, and an actionable business plan that creates accountability for the forecast.
A great plan is one that nobody can rip apart. A great plan is one people will get behind. A great plan naturally becomes everyone’s plan.
So, let’s break it down and see exactly why having a solid business plan in place is vital to the progression of your business.
The primary purpose 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 allows you to understand what needs to be done for forward movement.
Clarifying can consist of a simple description of your business and its products or services, or it can specify the exact product lines and services you'll offer, as well as a detailed description of your ideal customer.
Businesses evolve and adapt over time, and factoring 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 clarifying direction in the business plan lets you know where you're starting, future vision allows you to have goals to reach for.
Small business funding
The Small Business Administration states, "The development of a comprehensive business plan shows whether or not a business has the potential to make a profit."
By putting statistics, facts, figures and detailed plans in writing, a new business has a better chance of attracting investors to provide the capital needed for getting started.
Attract Team Members
Business plans can be designed as a sale tool to attract partners, secure supplier accounts and attract executive level employees into the new venture.
Business plans can be shared with the executive candidates or desired partners to help convince them of the potential for the business, and persuade them to join the team.
Encourages good management
A business plan conveys the organizational structure of your business, including titles of directors or officers and their individual duties.
It also acts as a management tool that can be referred to regularly to ensure the business is on course with meeting goals, sales targets or operational milestones.
Wondering how a business plan can impact your company’s performance? Get in touch to discuss how our bespoke services can add real value to your business.