Via Forbes : Having a business plan is like having a blueprint or a solid foundation for your company. Entrepreneurs and leaders know that, like the weather, business isn’t static. It changes over time with your business’ development. It’s also not just a single document that you write at the beginning and then toss aside. Very often, a company will end up with multiple business plans as its vision, objectives, products or services change.
No matter what phase your business is in, drafting a strong business plan and understanding what’s essential to it will ensure your success. Some of the must-have sections of a well-written business plan include:
1. An executive summary
2. A mission statement
3. A background of your company
4. A background of your industry
5. A description of your product/service
6. A competitor analysis
7. A marketing plan
8. A financial plan
9. A management plan
10. An operating plan
11. A timeline
Whether you’re just starting a new venture, looking to test the feasibility of a new business project, or looking into getting external capital and investors, there are many reasons you should have a business plan at your disposal:
1. To Forecast Your Step-By-Step Strategy To Success
Having a solid strategy is crucial at any phase of your business, whether you’re just starting up or growing an existing venture. Like weather conditions, the needs and challenges of your business change. A business plan will help you understand your challenges better and outline specific goals and courses of action that are needed to improve.
In a way, a business plan is like your car’s GPS. It gives you direction and focus and speeds up your journey through all the necessary steps. After writing business plans with my clients, it becomes easy for us to track their progress, review what goals have already been accomplished and what’s still lying on the back burner, identify what changes should be made, and discuss what direction the business should be heading.
2. To Secure Funding For Expansion
When you own a company, you always face investment decisions to support your company’s growth. You may learn that your cash flow alone won’t be sufficient, so you have to seek external funding. But investors and lenders expect a big ROI, besides just the business’ income, profit and loss statements, right?
Whether my clients are aiming to grab attention from a venture capitalist or angel investors, we spend time preparing a great presentation that piques their interest. The most crucial winning component is a well-written and up-to-date business plan. It serves as concrete proof that investors feel confident in my client’s ability to generate sufficient cash flow and fulfill debt obligations.
3. To Manage Your Cash Flow
It’s no secret that healthy profit and cash flow management are key. Clients that come to me often already have five- to six- figure revenues per month, but due to their equally high expenses, it’s a wash. The main reason why many businesses struggle and ultimately fail is not because of a lack of profit or clients, but because they break even.
A well-written business plan will help you keep track of money coming in and out, prepare cash flow projections that can alert you to trouble before it strikes, and improve receivables and payables. You know when to delay outlays of cash while encouraging these who owe you money to pay it as fast as possible. You’re also able to invest in necessities for your business, like marketing to make more money or tools that are crucial for your company’s growth.
As we know, when you need external funding, banks are wary of those who have to have the money today. Thanks to business plans, my clients are able to receive financial services from businesses that could pay them today and give them more time.
4. To Plan A Strategic Exit
At some point, you might decide to exit your business venture. A solid business plan outlines the most efficient routes to liquidate your investment and make a substantial profit.
When I was an attorney and practicing family law, we aways said: “Plan your divorce while you are still in love.” The same rule applies in business. Many of my clients have co-founders, and some are actually married to their business partners as well. Of course, you never want to assume that a partnership will fail, but life happens, right? When planned ahead of time, a dissolution can save a lot of emotional and financial pain in the process and during the proceedings.
Writing a solid business plan can be time-consuming, but it’s essential if you want your company to not only survive, but thrive, and bring consistent profit and ROI.