Why A Business Plan Is A Foundation To Your Business Success

There are a number of benefits to both you and your business when you take the time and make the effort to develop a start up business plan or an ongoing business development plan. To many the obvious reason may be to approach a bank or lending institution to raise finance. However, apart from business financial planning, there are a host of other reasons why a business plan is the foundation to your business success.

If you are not convinced that all the time and effort needed in preparing a business plan is necessary consider the age-old adage "When you fail to plan you plan to fail". As trite as this saying may be, ignore it at your business peril. So, why do you need to develop, publish and communicate your business plan?

Once you have finished writing your business plan you will have a total understanding and a clear picture of your business such as:

• Where your business is today and where you want to get to.
• Its strengths and weaknesses.
• Its key competition.
• The opportunities and the threats.
• The available markets.
• Its budget needs and financial constraints.
• Your primary goals and objectives.

When you plan ahead and communicate those plans, you are far more likely to be regarded as focused and with a clear sense of purpose and direction. A well prepared, well documented, and well communicated business plan definitely demonstrates that you have a vision, you know what you want for your business, and you know how to get it.

Stepping back for a moment, there is a far more fundamental and practical reason why business financial planning is an absolute necessity. When you have all those great ideas buzzing around in your head or written on the back of envelopes it is not always clear what the pitfalls or threats are. Developing and writing a business plan forces you to put your ideas down in a clear and orderly fashion. The main purpose of your business is to make money and your business plan must prove it's going to happen.  

It is not uncommon that as a result of developing your business plan you discover that what you originally thought was a viable business proposition is actually flawed and should be scrapped. This happens all the time and, as unpleasant as this realization is, ask yourself the question what is more unpleasant - dropping your business idea or losing all of your earned business capital?

Let me say at this point that if you are reading this and thinking what actually goes into a business plan or how do you go about writing a startup business plan for example, don’t worry because there a number of options open to you such as:

• Talking to your local bank manager.
• Discussing your needs with a business planning consultant.
• Visiting your local library where you’ll find business planning formats and range of books on developing your business plan.
• Searching for free or paid business planning software on the internet.
• Searching for free or paid business planning templates on the internet.

A business plan is the ideal tool to monitor progress against the key objectives of your business. Monitoring progress regularly and often will tell you immediately what is working well and what isn’t. You will spot what strategies need to be enhanced and what needs to be improved. Your business plan is the foundation to your business success but, unlike a physical foundation, your business plan is not fixed, it is a living document which must be updated to reflect the strategic direction your business is taking. For example, if you decide to take your business on the Internet to make money online, you will need to revise and update your business plan for that new situation, and so on.

One of the favorite decision making tools within the business planning process is called a SWOT analysis. This stands for Strengths Weaknesses Opportunities and Threats. Understanding each of these in detail as you monitor the success or otherwise of your business plan can help you in identifying what needs to be improved, potential threats such as cash flow, weaknesses such as operational inefficiencies, and new opportunities you had not recognized previously.

One of the greatest benefits of a well constructed and documented business plan is using it as a communication tool. Regardless of how good a communicator you may be, your business plan will undoubtedly help you communicate your vision, your purpose and the direction you and your business wish to take. Your business plan provides clarity in what you want to achieve and how you want to achieve it.

A business plan, as long as it is realistic and the business proposition is viable and feasible, will help you get funding whether that is through the bank, other financial institutions, or individual investors. Remember, however, business financial planning is only one part of the business plan and that you also need to communicate effectively with your immediate staff, their employees, and even suppliers. If this means preparing subsets or summaries of the business plan because of company private or sensitive information, again, it will be worth the time and the effort to do so.

Hopefully, by now you realize that it's essential to have a business plan. It can be the difference between success and failure.