With many small businesses not having a plan, they struggle to take their business further and ultimately are more likely to fail. If you’re considering starting your own small business then this article will help provide insight on what it takes to have a successful plan.
“8 Reasons Having a Business Plan Is Important for Small Businesses” is an article that provides 8 reasons why having a business plan is important. The article also includes a video which explains the importance of a business plan. Read more in detail here: 10 importance of business plan.
Is a business strategy really necessary? Is it worthwhile to devote time and money to it? Isn’t it possible to simply wing it and forego the whole preparation process?
These are excellent questions. Everything you need to know is right here.
1. If you’re looking for a loan or an investment, it’s a must.
If you’re seeking investment from a bank, an angel investor, or a venture capitalist, you’ll need to demonstrate that you have a clear understanding of your small business’s trajectory.
You don’t need to produce a 200-page report, but you will need something to show your lender or investor that demonstrates that there is a market for the issue your company addresses and contains your major financial statistics and predictions.
Your business plan should make it easy for all types of prospective partners and supporters to grasp your company strategy and finances. It’s much better if you can graphically convey data using charts and graphs.
LivePlan makes this simpler by guiding you through the process of setting up and predicting your financials step by step, without the need of cumbersome spreadsheets, so you can confidently show your figures. It’ll even generate all of the charts and figures you’ll need to construct an outstanding strategy, even if you’ve never done it before.
2. Business planning has been shown to help you expand 30% quicker.
Writing a business plan isn’t about coming up with a document that properly forecasts your company’s future. What matters is the process of drafting your plan. Writing your strategy and reviewing it on a regular basis can provide you with a clearer picture of what you need to accomplish to reach your objectives and be successful.
Setting objectives, analyzing your progress toward those goals, and making adjustments to your company as you learn more about your consumers are all part of business planning.
You are not required to accept our word for it. Companies that plan and analyze their outcomes on a regular basis develop 30 percent quicker, according to studies. Aside from speedier expansion, research suggests that organizations that plan out their operations do better. They’re less likely to end up as one of the dreadful statistics on firms that fail or have cash flow problems that force them to shut.
3. You’ll be able to make major financial choices with confidence.
Some of the most difficult difficulties you’ll face as your company expands include determining whether to recruit new staff, when to expand to a new site, and whether you can afford a significant purchase.
These are significant financial choices, and if you examine the estimates you sketched out in your company plan on a frequent basis, you’ll have better data to base your judgments on.
4. You’ll be more likely to spot key cash flow issues early on.
Understanding and managing your company’s cash flow is the other side of those large expenditure choices. One of the three essential financial statements you’ll create with your company plan is a cash flow statement. (Your balance sheet and income statement are the other two) (P&L).
Regularly reviewing your cash flow statement as part of your business plan review can help you see possible cash flow issues sooner, allowing you to take action before you run into a financial crunch and can’t pay your expenses.
5. Having a business strategy helps to reduce risk.
There’s a lot you don’t know when you’re just starting out—about your clients, your competitors, and your operations.
You signed up for part of that unpredictability when you began your company, but there’s a lot you can do to limit your risk as a business owner. Creating and evaluating your business plan on a regular basis is a wonderful approach to detect errors, gaps, and assumptions you’ve made, as well as establish contingency plans.
When you link an accounting program like QuickBooks or Xero to LivePlan, it’s simple to compare actuals to predictions. To view your financial success, LivePlan automatically pulls in real-time actuals, so you don’t have to juggle spreadsheets—or worse, conduct manual data input.
As you discover what works and what doesn’t in your company (marketing, sales strategies, production, inventory), you can easily change your predictions and make modifications in your business (marketing, sales strategies, production, inventory).
6. It serves as a strong basis for strategic planning and prioritization.
Your company plan is an excellent opportunity to spell out how your revenue and sales targets align with your spending budget. Making a clear link between what you’re investing in and the outcomes you want to attain can help you ensure that you’re on the right track.
It’s simpler to get everyone on your team on the same page with a business strategy. You’ll be able to describe how you believe you’ll go from here to there in simple words.
Getting your team to agree on a set of priorities can boost your overall efficiency. Everyone on your team should be able to see the broad picture and grasp your long-term objectives. You’ll need their buy-in right away, and as time goes on, you’ll want to make it simple to measure and share your success.
If everyone on your team understands how their job affects the bigger firm, they’ll be more committed in accomplishing your objectives since they’ll understand how important their contribution is.
LivePlan generates easy-to-understand reports that you can share with your team to let them know how things are progressing. This kind of transparency allows everyone to plan and prioritize, connecting the links between tactical effort and revenue effect.
7. It will assist you in setting realistic objectives and milestones.
SMART objectives and milestones are included in every successful company strategy. The following are examples of SMART objectives:
- Specific
- Measurable
- Achievable
- Relevant
- Time-based
If you write a business plan but don’t include any objectives or milestones, it will be useless. You’ll have a hard time unifying your team around the same objectives if you create goals and milestones for your firm and team that aren’t linked with the strategy you outlined in your business plan.
Set high-level milestones in your company strategy. Then, using those milestones as a guide, set significant objectives for your sales and marketing strategy.
8. If you ever want to sell your firm, your business plan is a valuable asset.
You can decide to sell your firm or position yourself for acquisition in the future. A strong business strategy will aid you in making the case for a better value. If a buyer can easily comprehend your company strategy, target market, and overall capacity to develop and scale, your firm is likely to be worth more to them.
What should you do first?
The value of having a business plan and evaluating it on a regular basis extends well beyond mere goal-setting and planning. The important thing is to get started. It’s not as difficult as you would imagine! It doesn’t have to be a 200-page formal business plan—or even 20—and it doesn’t have to take months to complete.
A business plan may even be written in under an hour. And there are several resources accessible to assist you. Get a free example business plan and a free business plan template by downloading our free business plan template.
Check out LivePlan for step-by-step instructions, tutorials, and educational material to assist you in creating your business plan.
The dynamic template in LivePlan takes you through the planning process step by step. You’ll get from template to comprehensive business plan in no time with straightforward fill-in-the-blank inputs, simple yet effective financial forecasts, and gorgeous business plans that dazzle investors.
LivePlan makes the whole business planning process simpler by allowing you to monitor your performance as you expand, define the activities you’ll need to take your company to the next level, and even compare your plan to the competitors.
Watch This Video-
Having a business plan is important for small businesses because it helps them to grow and succeed. It’s easy to write your own, but you may want to hire someone else to help you in the process. In this article, we’ll go over 8 reasons why having a business plan is important for small businesses. Reference: how to write a business plan step-by-step.
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