How Important is it to Have a Business Plan?
First, what is a business plan? The short definition of a business plan is a document setting out a business’s future objectives and strategies for achieving them. So how important is it to have one? We will take a look at a few of the great benefits of having one as well as why some people think it’s not so important.
7 Key Components of a Business Plan
- Executive Summary
- Business Description
- Market Analysis
- Organization Management
- Sales Strategies
- Funding Requirements
- Financial Projections
I won’t go into each key component but the title of each should at least give you a good idea of what is included in a business plan. Taking a look at someone’s business plan should tell you just about everything you need to know about their business.
Keys to Success
Majority of people in the business world will say that having a business plan is a must. You can look at it as a roadmap for your business’s future. Within the plan, there should be goals that your business is striving to reach and studies have shown that you are more likely to accomplish your goals if they are written. This includes the overall business plan. Having your plan written out with a structure to it will not only allow you to see it but will allow you to share it with your team and others as well.
Your business plan will also help to hold you more accountable. You are the one creating your plan so there is no one else to blame if you are not following it. You and your team will also get a better understanding of your business and its current positions as well as future projections. Knowing exactly how your business operates physically and financially is a huge factor. If you don’t know some of these things then how do you know if your business is doing well or not? How do you prepare for the future if you don’t know whats going on in the present?
Analysis Paralysis will set you behind or worst, prevent you from moving forward. If you are not familiar with the term Analysis Paralysis it basically means when someone thinks so much about something and wants to make sure it is so perfect that it either consumes a ton of valuable time or the person never goes into action because they are too afraid of not knowing if everything will work out perfectly.
So imagine someone who is starting a new business and wants to create a business plan but sits there day in and day out working on creating the God of all business plans. One of two things will happen, either you will put so much time and thought into it that you scare yourself out because your numbers are not showing exactly what you want or by the time you are finished with your plan and get started you will realize that things are not going exactly as planned and you have to redo everything. Now think about the person who had a good basic idea of what he was wanting his business to do and he just jumped right into it. He did not spend a ton of time to create a super impressive business plan, instead, he went the route of getting his feet wet and learned as he went. Now I’m not saying that you don’t need to have any plan at all because the person who dives right into it with a basic idea can plan as he goes. Some people may think that this route is asking for failure but when you compare action vs waiting to have everything perfect, a lot of the times the person who takes the most action will outperform the other.