Why Your Business Plan is Essential to Your Success
When you first come up with an idea for a product or service, you’ll ideally test the feasibility of your business concept. If your idea seems like it has a market, you’ll also establish how your business will make money. After you have completed these two foundation steps, you’ll want to define the path needed to move your product from concept to consumer. In more formal terms, you’ll create a business plan.
A Business Plan is Your Business’ Strategic Compass
A business plan can serve many purposes, such as enticing investors, getting financing from a bank, attracting a team to develop your product, help you rent space, outline marketing plans, and evaluate new initiatives.
By writing all of your business objectives down, it will help you see your business in a new, organized light. It will make it so others can see your vision and help you bring it into being. If your ideas and milestones are in your head or not organized in a centralized document, it will be challenging for your team to understand if your efforts and results are on track. Also, you’ll be more likely to avoid chaos and conflict in your business if everyone is working from the same plan.
A Business Plan is Also an Inexpensive Dry Run
Your business plan is like a blueprint for all aspects of your business. In it, you’ll revisit your feasibility tests, business model, and layout a strategy to achieve your goals within a certain amount of time.
The more you state in your business plan, the more your business plan will help you test assumptions and identify flaws in your concept. “A Business Plan is like a dry run to see if there is a major problem with your business before losing any money,” says Mike McKeever, author of How to Write a Business Plan.
What Goes Into a Business Plan
While there is no concrete formula for writing a business plan, here are the more common elements you’ll likely put in your business plan.
- Your “why” – the Vision, Mission, and Value Proposition
- Your goals – the milestones you’ll need to meet to support the vision and mission
- How you will get there – the strategy to achieve your stated goals
- What resources you need – the capital, people, and processes
- Who’s buying what you’re selling – market intelligence provides evidence and substantiates the need and market for your product
- How to launch – the business plan becomes the roadmap for developing your annual strategic and implementation plans to identify the specific short-term goals, objectives, and action steps to be accomplished over a one-year time frame
- Adaptability to changing conditions – the business plan is a compass that serves to keep you on course while providing flexibility to recalibrate and respond to unexpected internal and external events
To illustrate the last point, the collapse of the US Auto Industry from 2008-2010 forced each of the three majors to develop new business plans to confront the changing economic and market environments. One good example is Ford’s Business Plan submission to Congress.
During a company’s existence, it will use the business plan for a variety of purposes, such as securing funding or entering into strategic partnerships. But most importantly, your plan conveys your message, your aspirations, and your commitment to all stakeholders. The Vision, Mission, and Value Proposition described in the plan underpin the business, and are at the core of why you exist.
As the Messenger, your plan will serve to:
- Build leadership and employee consensus around the purpose and goals of the company and how everybody is involved in the outcome
- Communicate a company’s core values, commitment, and dedication to everyone they touch
- Provide the theme that weaves through your marketing efforts, and forms the foundation of your brand, identity, and image
The Living Document
No matter the size or stage of evolution of your company, the business plan helps achieve success by keeping the organization on track, keeping resources aligned with goals, and serving as a mechanism of checks and balances.
Keep your plan alive and relevant – review and update it at least once a year to adapt to internal and external changes. This is critical because it forms the foundation for developing and driving your company’s annual strategic and implementation plans.
How to Write Your Business Plan
There are basically two approaches to creating a business plan: do it yourself or hire a business plan consultant.
If you would like to write your business plan, there are many resources online to help. At Cayenne Consulting, we specialize in writing high-quality business plans. We know not everyone is ready to hire us when they begin their business, so we’ve put together resources to help those who want to do it on their own. First, we have many business plan examples of actual business plans that we’ve written for our clients. We’ve also compiled a set of business plan resources to get you started.
The other option is to hire a business plan consultant to work with you. We recommend working with a consultant that has not only written business plans before but has written plans that have a track record of raising capital, which shows they know what investors want to see. Our business plan consultants work one-on-one with you, have a proven track record, and will be able to give you an expert outside perspective on your concept and implementation plans.
Writing a business plan, while a significant undertaking, can save you time, validate your processes, help you create a centralized working document for your entire team, and get your business essential funding. Once you have completed this foundation piece, you’ll thank yourself over and over again as you grow and evolve your business.