The Importance of Business Plans


Importance of a business plan

Whether you are a start-up or are well established, an essential part of your corporate arsenal is a business plan. While they are sometimes seen as a tick box for gaining investors or to satisfy regulation/policy, a business plan can offer significant value, on an ongoing basis. The purpose of this blog is to explain the plans importance, we will discuss the components in greater detail in a future blog.


What should a business plan be?

According to Wikipedia and its cited notes, “In its entirety, this document serves as a road-map that provides direction to the business”. While useful for seeking funding from banks/investors and guidance on goals, operations and projects. This misses key fundamentals on the businesses purpose and importance of developing a business plan; which is using it!


What a business plan typically is

If we consider your business plan as a road-map for your journey it should provide:

  • The reason why you are taking the journey

  • Goals, objectives, strategies

  • The manner in which you will achieve them (values)

  • Market research

  • Service profiles and products

  • Target audiences

  • Justification for your journey (feasibility/need/SWOT)

  • Financial forecasts and actuals if available

What they normally miss

For the plan itself, these are typical components. But there is no point developing a plan that gets shelved. The importance of having a plan lies in following, adapting and reporting on it. So other important elements to be considered in your plan are:

  • Prioritized organizational project requirements

  • Performance metrics

  • Investor relation requirements

  • Change approval processes

  • Reporting processes

  • PESTLE/Risk ID

  • Stakeholder Analysis


Why are business plans important?

Here are the top reasons you should follow, adapt and report on your business plan.


Important benefits of business plans include:

  • Clarity on how to grow the business

  • Prioritized direction

  • Stakeholder and investor satisfaction

  • Measure whether you are accomplishing your goals, objectives and strategies

  • Ability to respond to changing markets

  • Managed risk, costs, timeframes and quality

  • Knowing where you stand and where you are going

  • Increased likelihood of success

  • Finding performance gaps

  • Removing roadblocks

  • Understanding your floating line

Pitfalls of not having a plan, or managing it (to name just a few):

  • Loss of funding/respect/reputation

  • No direction

  • Project failure

  • Doing the business, instead of growing the business

  • Loss of work/life balance


Summary

Organizations are evolving and understanding the importance of business plans for different reasons. In larger organizations multiple business plans roll-up to strategic plans. Make sure yours doesn’t get shelved and helps to continue to grow your business after it is approved. We have management and dashboarding tools available, with no licence fees, to support ongoing management and reporting of you business plan, and can provide services to establish your plan, if required.

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