You would think it’s obvious that without an initial business plan and ongoing planning and budgeting, any business is likely to lose its way. However, many businesses end up spending a lot of the time relying on luck…
What exactly is a business plan?
A business plan is a like the blueprint for a business, and the more detailed it is, the easier it is to follow. Often times, its helps folks visualize it in writing:
- Why the business exists – its purpose, objectives, mission, values, and vision.
- The structure of the business (business model)
- A description of products and services
- Analysis of the industry (competition, opportunities, and threats)
- Analysis of the target market (desires, needs, and behaviors)
- Description of marketing strategies
- Projected sales and expenses analysis
- Benchmarks for measuring performance
- Specific goals along with timelines for achieving them
- Plans for overcoming potential problems and obstacles
Why is a business plan so important?
In order to start a small business successfully, it’s vital to start with a detailed business plan. Imagine you’re taking a trip – you will surely need a well thought out idea of what you want to experience. This is not to say that you can’t set off without a plan, you could even have some fun, but it’s probably more likely that you will run into some obstacles.
What kind of problems could you run into?
Without planning and budgeting, you could wind up making some bad decisions, or getting too focused on the wrong things. Of course a business plan is not one-time effort, and the terms are certainly not set-in-stone. Business owner should review their business plan regularly and make adjustments when necessary.
What is the importance of budgeting for small businesses?
When planning a business, financial planning, or budgeting, is also a vital part of the business plan. Making a budget is basically scheduling your business’s future spending. Budgets often use your financial history to calculate an increasingly accurate financial forecast as time goes on.
Every business, no matter the size or industry, should have a clearly laid out business plan and a practical financial budget. Not every business plan needs to be complicated, but simply having a plan will help you to keep your business on track.