Today all entrepreneurs or small business owners know and respect the importance of a business plan. But to most of them, the benefit it has for their company after it has been used for investment remains hidden. Therefore, it is essential as it plays an important part in the growth and development of your business. Now, a well thought out Business Plan is as a necessary tool for building a viable business. Whether you are seeking financing from a lender or plan on approaching the Small Business Administration for a loan guarantee, a well thought out plan of action is essential for presenting the formalities of the proposed venture. In today’s highly competitive marketplace, a formal operating plan may mean the difference between success and failure.
What is a Business Plan?
Simply put, a Business Plan is a written statement outlining how you intend to operate your enterprise into the future. While most new business owners have a general idea of how they want to run their company, those intentions are usually not formalizing. As the business grows and new challenges emerge, the owner often needs to involve others in the venture. This is the time when the owner finds himself/herself under pressure to formulate a plan for future growth. Unfortunately, this time affords the least amount of time for planning. If you have decided to start your own business, one of the first things that you need to do is to work on a business plan.
A business plan is so important because it serves as a compass for the direction your business will take in the future. Having a plan will also help you achieve the things you want to meet and will help your business to find success as well.
The following are some of the importance of having a business plan in a business that will drive a person to the business financial successes.
Consider the Details
One of the reasons that having a business plan is essential is that it will help you to consider the details of your business and its’ future. As you are working on your plan, you will probably find that there are many aspects of your new business that you have not considered. Getting started with a business plan will help you to save money and time since you will be able to deal with issues before they become a problem.
It is important in developing A loan application.
A good Business Plan will be required by the lending institution before financing can be done. Evan if you want to apply to the Small Business Administration a lending institution must first approve the loan. The question is, are you capable of running a business? The lender will ask for proof of experience, collateral and a statement on how you plan on paying back the loan if the venture fails. Even if the lender is a friend of yours, your relationship is strictly business as he/she demands assurance of repayment.
You must provide them reasonable assurance you know what you are doing and how you plan on doing it. Most lenders and investors want to see that you have a clear business plan before they take a risk on your business. Having a planing already drawn up shows them that you are serious about being successful in your business. If you are going to show your business plan to potential lenders and investors, make sure that the figures you use are accurate, so your plan is credible.
Management Tool
Starting a business is a tremendous job, and is helpful if you have something that can help you manage the business. A business plan can act as a management tool that can help you focus on where you are and where you want to be in the future. This will help you to keep your daily tasks well managed and will also help you to accomplish long term goals as well.
A Road Map to Success
Very few entrepreneurs achieve their goals without first formulating a well thought out plan of action. Any responsible entrepreneur will spend the time necessary to record his/her expatiations for the business. Proper planning guarantees preparedness for the future thus reducing challenges to their lowest denominator. Reducing challenges means less risk and a higher probability of success. It just makes good operating sense to plan ahead when risking time, money and resources.
Predetermined Check Points for Measuring Progression of Goals
Like a traveler sets off on a journey and plans when to reach his/her destination, a Business Plan also serves as a guide for the journey. With a Business Plan in hand, an owner can set checkpoints in which progress can measure and adjustments. As each step in the business plan is reached, an evaluation is made. Further funding can apply for physical expansion, upgrading equipment or more employees. As each goal is satisfied and a cycle of activity is completed, it signifies the beginning of new goals. New goals mean an extension or reevaluation of the plan.
The Business Plan Is a Vehicle for Involving Others into the Venture
Even if there has been no need for employees, a sound Business Plan sets the stage for bringing new people into the venture. This assures everyone understands the goals of the business and what is expected of them. Far too often the owner thinks he/she can commutate with their small staff of workers only to find out their employees don’t understand the overall plan. A Business Plan provides needed direction for everyone to stay on the same track. The planning process also assists in the expatiation of meeting goals to the employees and reducing the possibility of any unscheduled crises.
If you decide to go without business plan, the chances are that your business is going to end in disaster. You can use a business plan throughout all stages of your business to guide your business towards success.
While it may take some time and energy to get a business plan together, in the end, it will be well worth the time to get it done right.
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