5 reasons why a business plan is important
The main purpose of a business plan is to establish a business focus, secure funding and attract the best people to work in your business.
The core elements of the plan are where you are now, where you want to be and how you will get there. They include detailed information about your purpose, market analysis, competitors, customers, cash flow projections, marketing, sales and logistics.
Creating a business plan before you start your business will help to give you a clear path to follow whilst you develop and grow your business. It is not a document that you simply create and file, it needs to become the backbone and a guide for everything you do. Control measures need to be included so that you can monitor and measure how well the business is doing and avoid any critical issues.
Here are 5 reasons for writing a business plan:
- To set objectives for yourself and your team. This is really important as everyone needs to know the part they play in the business. The senior management team should set a plan for how they are going to achieve these objectives. Monitoring progress and making changes where required will be an integral part of these objectives being met.
- To secure funding, whether this is a loan from a bank, a grant or capital investment. They will need to understand your longer-term plans for growth, and crucially your cash flow forecast, balance sheet and income statements to ensure you have the capital and resources to pay back.
- Purchasing assets or renting premises is always a difficult decision. However, if you know your financial situation and what your projected requirements and costs are for the future, this will help you to make informed decisions about whether you buy, rent or lease equipment or move into new premises.
- To identify financial weaknesses. You are more likely to identify cash flow challenges early on if you are continually monitoring your business plan and the cash flow statement.
- Making a new hire. Identifying when and who you might need to hire in the future and if you can afford them. Your business plan will highlight new opportunities and areas for growth which might include the need to hire someone with a specific set of skills to make it happen.
For help writing your business plan or reviewing an existing one from one of our experienced and qualified team, please call 0121 550 8509 or email Graham (firstname.lastname@example.org)