Why Is A Business Plan Good for Business?
As a small business owner (second time around), I am so glad that I completed a business plan this go around. When I had my first business, a law practice, I did not complete a business plan. I started my law practice without any guidance or “real game plan”. I believe that if I had done a business plan before starting my law practice, I could have avoided many of the problems and issues I had to deal with running my law practice. I believe that due to lack of proper preparation and proper planning, I had no choice but to close my law practice.
When I decided to start a mediation and consulting business, I made sure that I had a “game plan”; I was prepared; and I had proper guidance. I did this by completing a business plan and doing research on my desired business. A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. A business plan helps you to define your mission, vision, and statement of purpose for your business idea. A business plan assists one with the organization of their business and helps you to determine who will be the main players in your business.
A business plan is extremely helpful and required if you plan to seek financing for your business from banks or investors. Business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that timeframe. Investors and Bankers like to see your “business plan” for your business to determine if it is worth the investment, viable, and when will they receive a return from their investment.
Depending on your audience, you should complete both an “external” business plan for bankers and investors, and “internal” business plan for your personal use to organize and grow your business. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit’s services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies.
Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory, or a restructuring of the organization. An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.
Business plans are decision-making tools. There is no fixed content for a business plan. Rather, the content and format of the business plan is determined by the goals and audience. A business plan represents all aspects of business planning process declaring vision and strategy alongside sub-plans to cover marketing, finance, operations, human resources as well as a legal plan, when required. A business plan is a summary of those disciplinary plans.
In conclusion, a business plan to me is way for you to tell your story as why you want to start your business, description of your product or services, a road map on how to set-up your business and maintain your business, and a guide for bankers and investors as why they should invest in your business. A business plan is a road map for you to follow in every step of setting up and running your business. Also, a business plan gives you a three to five year plan for the growth of your business. One good thing about having a business plan is that you can always change and update it as your business changes and grows.
Donya Zimmerman is a business consultant, mediator, and legal professional with over ten years of experience. She is owner of Family & Community Mediation and Business Consulting based in Baltimore, Maryland and has been in business since 2013. Contact information: firstname.lastname@example.org, www.facebook.com/FACMBC, and https://dzimmerman36.wordpress.com.