Writing a Business Plan: Why It Is Worth the Time and Effort

Are you thinking of approaching a bank for finance to support your business? If you haven't already gone to see a manager, you might not know that the first thing they want to see is your business plan. Perhaps you are not convinced that all the time and effort required to prepare the plan is necessary; If so, here are the main benefits for both you and your business. 1 No matter how good a communicator you are, you will never be able to successfully express your vision for business in the form of a completely put-together business plan.  It provides a clear understanding of what you want to achieve. It allows you to express your thoughts clearly. 2 Too often business owners try to sell their idea verbally and at the end of the interview with the bank the manager is none the wiser than he was in the beginning. I think you can guess the result of many of those requests! 3. A business plan will help to convince both you and the bank about the feasibility and viability of the project. There is nothing like putting all the facts before you to clarify the major issues. That doesn't take away from the fact that a business owner who plans ahead comes across as being more ambitious and more focused. A well-crafted business plan shows that you have the vision and know what you want. There are many thoughts floating in your mind, pitfalls or stumbling blocks to success are never visible. A mind buzzing and full of thoughts will rarely achieve clarity. A business plan forces you to put your ideas in writing and in an organized manner. This can result in you going in a completely different direction to what you initially thought about, or even giving up on your idea altogether. Not a pleasant idea, but which one would you prefer? Loss of your hard capital or opportunity to rethink your idea? 6. It's a perfect tool for monitoring progress against the objectives you set (we'll cover objective setting later). By checking progress against your plan, you'll be able to figure out if you're moving away from your original vision, and so you'll know what to do right. Imagine if you didn't have this test; An unnoticed change in direction or a lack in achieving your objectives, if left uncorrected for too long, can be fatal to your business. On the other hand, it may be that a change from your original vision may be a better option, but at least recognizing this change allows you to adjust your course in a planned, structured and controlled way. 8  Every action you take has a consequence. And a plan helps to make these results more clear. Being aware of the potential impact of your chosen direction allows you to plan ahead, enabling you to face whatever the world of self-employment can throw at you. That's one thing that "mental planning" 9 will not achieve. Putting your ideas on paper may make you realize that you need to do more research into the demand for your product or service. It may also highlight that your competitors' products or services need more scrutiny. Additional research can help avoid a potentially costly mistake or even uncover a hidden benefit you may not have noticed before! 10.  A plan will guide you as to how much money is needed to make an idea work. You may have in your mind an estimate of what you'll need to do, but until you do a cash flow forecast, you may not realize that your equipment will require an overdraft limit in addition to the loan. If the mention of preparing a cash flow forecast makes you sweat, don't worry because later I'll show you how to do an 11.  A business plan will help you get funding. One of the main reasons a bank turns down a request for a loan is a lack of information to help make an informed decision. If the manager doesn't know enough about your idea or business, he won't feel comfortable enough to support you. He has to understand your business before saying yes. Sometime in the future, he may have to explain to his superiors why he gave you the money, so he needs as much information as possible to support his decision. A business plan will make her feel more comfortable and more able to say yes. Its strengths and weaknesses, the environment it operates in, what potentially can go wrong, and what you can do to ensure its success. Putting your plan on the back of an envelope is not going to be achieved. You must have realized by now that having a business plan is essential; It could be the difference between success and that dreaded "f" word - failure! It's about understanding the importance of planning ahead. Spend time getting your ideas down on paper in a structured and logical way.