If You Want To Be A Winner, Change Your WHY IS IT WORTH YOUR TIME TO WRITE A BUSINESS PLAN? Philosophy Now!
Why Is It Worth the Time and Effort to Create a Business Plan?
Are you considering approaching a bank for financing to help your business? If you haven't previously met with the Manager, you may be surprised to learn that the first thing he'll want to see is your Business Plan.
Perhaps you are not persuaded that the time and work required to prepare a strategy is worthwhile; if so, here are the primary advantages for both you and your organization.
No matter how brilliant a communicator you are, nothing will ever be able to explain your vision for the firm as effectively as a well-crafted Business Plan. It gives you a clear idea of what you want to accomplish. It enables you to convey your thoughts more clearly.
Too often, company owners attempt to sell their concept verbally, and at the end of the session with the bank, the Manager is no wiser than he was at the beginning. You can probably anticipate the outcome of many of those demands!
A Business Plan will assist you in convincing both you and the bank of the feasibility and viability of the enterprise. There's nothing like having all of the data in front of you to help you understand the main concerns.
It's impossible to deny that a business owner who prepares ahead comes seen as more ambitious and dedicated. A well-written Business Plan displays that you have a vision and know what you want.
When you have a lot of thoughts swimming around in your head, the hazards or stumbling blocks to achievement are never obvious. A mind that is racing with ideas will rarely achieve clarity. A Business Plan encourages you to put your thoughts on paper and in a logical sequence. This might lead to you taking a very different path than you had planned, or perhaps abandoning your concept entirely. It's not a nice concept, but which would you rather have? Is it better to lose your hard money or to reconsider your idea?
It is an excellent tool for tracking your progress toward the goals you have set for yourself (we will cover objective setting later). By comparing progress to your Plan, you will be able to see whether you are straying from your initial vision and will know what has to be corrected.
Imagine if you didn't have this safeguard in place; an undetected shift in the course or a lapse in meeting your goals, if left uncorrected for too long, might be catastrophic to your company. On the other side, it may turn out that a deviation from your initial vision is a superior option; nevertheless, recognizing this change allows you to adapt your route in a planned, structured, and controlled manner.
Every action you perform has a consequence, and a Plan helps you clarify these repercussions. Being aware of the potential consequences of your chosen path helps you to plan ahead, leaving you more prepared to deal with anything the world of self-employment may throw at you. This is not something that can be accomplished by "mental planning."
Putting your ideas on paper may lead you to realize that you need to conduct further research on the demand for your product or service. It may also indicate that additional research about your competitor's products or services is required. An additional study might help you avoid a potentially costly error or perhaps unearth a previously unknown advantage!
A plan can help you determine how much money is required to make a concept a reality. You may have a good idea of how much you'll have to commit in your head, but unless you conduct a Cash Flow Forecast, you may not realize that an overdraft limit, in addition to a loan for your equipment, would be necessary. If the very notion of creating a Cash Flow Forecast causes you to break out in a cold sweat, don't worry; I'll teach you precisely how to accomplish it later in the book.
A Business Plan will assist you in obtaining funds. One of the biggest reasons banks decline down loan requests is a lack of information to help them make an informed choice. If the Manager does not understand your idea or business, he will not feel comfortable enough to help you. Before he can say yes, he has to understand your business. He may have to defend his judgment to his superiors at some point in the future, so he wants as much information as possible to back up his decision. A Business Plan will put him at rest and allow him to say yes more often.
By the end of your Business Plan, you will have a thorough grasp of your company's strengths and weaknesses, the environment in which it works, what may potentially go wrong, and what you can do to assure success. Doing your planning on the back of an envelope will not get you there.
You should understand by now that having a Business Plan is crucial; it might be the difference between success and the dreaded "f" word - failure! It all boils down to understanding the importance of planning ahead of time.
Spend time putting out your thoughts in a logical and orderly fashion. It will pay dividends in terms of convincing the bank to take you seriously as well as ensuring the future of your firm.