Why A Plan

Do I Need A Business Plan?

A business plan is one element of an overall business strategy…however; it is the key “business tool” through which managers develop and implement other critical elements used in the successful management of a business throughout its life cycle. Here are some things to think about…then decide if a plan can help your business succeed. You may take your business where you want without a plan, but having one will help you do it more effectively.

Do you need one? That depends on how you want to spend your day. There are many businesses existing today operating without a business plan. The managers of those businesses run their businesses using the “seat-of-the-pants” or “gut-feel” method. Much of these managers’ day is spent reacting to the demands of the business, the marketplace and customers. It’s difficult for these managers to find the time to do any planning or other work leading to growth or improvement in the business.

What lies ahead for such businesses? Experience teaches that businesses operating in this manner have a lower probability of financial success in the long run. However, short-term success is not unusual and this success is typically due to the vision, personality, and relationships of the owner/manager. At some point, growth generally stops and decline begins.

A business plan, properly developed, implemented and used --- the operative word here is “used”, without that, the plan remains a dream--- will establish the goals and focus the business. It provides the framework for assessing your target customer base, competition, strengths, weaknesses, opportunities and threats on in a disciplined manner. This provides your roadmap and your benchmark by which you lead and direct your business.

In order for the plan to be used, it must be simple and easy to work with. Business isn’t complicated and establishing the operating principles helps to keep it on track.

Using the plan as a “living” document in the routine running of the business helps measure your direction and progress along your course. Updating it on an annual basis forces you to keep aware of the changes in your marketplace --- and there will be changes.

The financial part of your plan helps you objectively measure your projected budgetary issues. Preparing a balance sheet and cash-flow analysis in addition to the usual income statement helps give a balanced overview of the financial health of your business.