We come across a lot of businesses and the vast majority don’t have a business plan. This is simply a document which summarises your business and critically examines the various components – finances, markets, customers, products, processes, etc.. Many business owners have some kind of plan or idea in their heads about how they want their business to develop, but the written plan ties the various facets together, firstly to examine whether they will actually work, and secondly to communicate the plan to other organisations such as partners, banks, etc..
It also helps identify areas of risk, such as relying on one or two major customers for work, or even main supplier of goods, or times when cash flow is strained which may require additional funding, such as an overdraft.
If you consider the next five years, the plan should hopefully answer the fundamental questions for the business:
- Where are we now
- Where do we want to be
- How are we going to get there
This is a more balanced approach rather than relying on luck or simply ‘more sales’. As any salesperson will know, anyone can increase sales; the trick is to increase sales which provide a profit that covers overheads and makes a positive contribution to the business.
Business plans tend to be prepared because someone like a bank or grant agency has asked for one, but they should be a matter of course. A lot of focus tends to be on business plans for start ups, and they are certainly important for this stage of business, but they are not one off documents which should only be prepared at the start. A business plan can help flesh out the implications of growth, new products, or additional employees. Remember established businesses can also struggle at times too.
So the final point is: if you don’t have a business plan, perhaps it would be a good idea to do one. You can find more information here.