Importance of having a Business Plan for a Small Business

A business plan is essentially a guide to putting up a business. It details how you will find and hire employees, expand the business and everything else in between. This becomes the point of reference for business owners on what their goals are and the basis for measuring success or development. Here are some of the reasons why entrepreneurs should always aim to create a detailed business plan.

A Means to Communicate

A business plan is written proof of all the effort the owner put into conceptualizing and planning the business. It can be a source of pride and a reflection of what the individual entrepreneur can do. As such, it is sometimes compared to as a resume which can be shown to prospective employees, clients and lenders. Employees can use it as a way to better acquaint themselves with the companies identity. Clients and investors will study and scrutinize the plan to see if it is something worth investing into. Lenders use it as a basis for evaluation if they will approve the companies loan application. A detailed business plan can help explain what you will do in difficult situations. This will help convince banks and lenders to approve any loans you choose to apply for as it details how you intend to repay debts and loans. A good, well written business plan also shows that you have the right mindset and attitude when it comes to putting up a business.

Measure Development

Creating a business plan will also help you determine how to run and manage your business. It is not a perfect tool by any means as you have no way of knowing the exact conditions and problems you will face while running the business. As such, experience in tackling various problems will help you modify the initial plan. Additional adjustments can be made along the way to account for changes in the economic stability and other possible issues. Even with the changes, you can still use the business plan to measure your progress.

Implement Strategies

A business plan can be used as a guide throughout the developmental stages. Depending on how much detail is included, it can be used as a basis on how to hire additional staff, make purchases or deciding whether or not to expand. As businesses deal with more competition, it becomes more imperative for the owner to have a strong business plan to identify ways on how to make the company stand out from the rest of the competition.

List Advertising Options

A well crafted business plan should include marketing strategies that the business intends to use. This would help the company focus its efforts on specific techniques that would improve the visibility of the business and help the company reach its target market. There are many options to think about including using print, radio, television, the Internet or a combination of some or all of these channels. Talk it over with your marketing staff to determine the best approach given the resources that are available.

Test Feasibility of Ideas

Business plans are just the blueprint for any business. There are issues that you will face once the business is already up and running. Having a business plan reduces the amount of headaches and heartaches that you may encounter once you start building the business. Essentially, business plans allow you to test the feasibility of your ideas before you invest additional time, energy, effort and resources in putting up the real thing. As a result, your business is given a better chance to succeed.

Common Mistakes in Writing Business Plans

  • Procrastinating

Some entrepreneurs do not create a business plan unless they are forced to do so by investors or banks. Plan as early as possible. A business plan will allow you to see the bigger picture and identify areas where you might encounter problems.

Stay clear of superlatives to describe your business objectives as they are often seen as just hype. Only list down data and results that you can expect to achieve, measure and verify. This means you will need to include dates, milestones and budget requirements among others.

  • Misconceptions on business growth

Businesses grow slowly during the first few years. Sales improve once you get a good following. Show more conservative results if you are unsure of how much the business will grow over a given period.

Bethany Wesch writes about blogging, branding and online marketing. She writes for a professional SEO Sydney company which specialise in providing online marketing solutions to small businesses and sales people.

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