1.A business plan will help you set achievable goals and milestones. Every good business plan outlines SMART (specific, measurable, achievable, relevant, timely) and meaningful goals and guide your sales and marketing strategies.
2.Research has proven that Business planning helps businesses to grow faster. The process of writing your plan and updating it regularly are the most important parts. That process gives you a better window into what you need to do to set milestones, track your progress and achieve your goals, and be successful. The key is being able to quickly respond to challenges and opportunities as they arise and as you learn more about your customers.
3.A business plan is essential if you’re seeking a loan or investment. If you’re asking a bank, angel investor or venture capitalist for funding, they are going to need a business plan. It doesn’t need to be 200 pages long, but you want your lender to be able to see that there’s a market for the problem your business solves. You have a strong plan for meeting your sales goals and that your key financial statements and forecasts are realistic.
4.A monthly cash budget which is a major component of a business plan will help to make spending decisions with confidence. It gives you a clear picture of your cashflows at any stage which can be really helpful when you’re trying to figure out whether you can afford to make a major purchase or take on an ongoing expense like a new employee.
5.With the help of a monthly cash budget, you’re more likely to catch critical cash flow challenges early as this helps in understanding and monitoring your businesses cash flow. Reviewing your monthly cash budget regularly will help you catch trends before you are anywhere near a cash flow crisis.
6.Having a business plan minimizes your risk when you’re just starting out. There is so much you don’t know about your customers, your competition, and even about operations. As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can do to reduce your risk. Creating and reviewing your business plan regularly is a great way to uncover your weak areas and flaws e.g., gaps, and assumptions you’ve made and develop contingency plans.
7.It’s a solid foundation for strategic planning and prioritization. Your business plan is a great place to map how your sales and revenue goals fit with your expense budget. Drawing a clear connection between what you’re investing in and the results you hope to achieve will help you make sure that you’re setting yourself up for success. If everyone on your team knows how their piece of the work impacts the larger company. The more invested they’ll be in meeting their goals because they’ll know their part of the work really matters.
8.Your business plan is an asset. If you ever want to sell your business in future or position yourself for acquisition. Having a solid business plan is going to help you make the case for higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market and your overall potential to grow in scale.
This article is written by Raja Mizan who is a senior lecturer in accounting & finance in a UK university. He is an ACCA member and also runs his own accountancy practice RMR Accountants & Business Advisors.