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9 reasons why your business plan is your best friend

Just last week I was talking to a business owner who had been running their business for three years and had never done a business plan. And that scenario is not as uncommon as you might think; some people just don’t plan their business.

Yet, a business plan is so much more than a document you share with the bank manager to secure a start-up loan. A good business plan provides a statement of intent for you, the business owner, and helps guide those around you on the business’s objectives and strategic priorities. Here are nine reasons why I believe planning should never be overlooked:

  1. It paints a bigger picture. When running a business, it’s easy to focus only on the short term and constantly be in reactive or delivery mode. A business plan provides a longer-term perspective that you can keep returning to, reminding you of where you’re going and what you’re trying to achieve.
  2. It drives you to action. Business planning sets out key activities for the future. Without a plan, there’s a risk that these activities will never get started, let alone finished.
  3. It’ll serve as a valuable reference point in future. A business plan should be something you reflect back on regularly to compare actual performance against objectives and see whether you’re on track.
  4. It creates certainty and common goals. You and your team (including a business adviser, if you’re working with one), need common goals to work towards, and that’s exactly what a business plan delivers. One of my clients creates an annual infographic that sets out key elements of their business plan for staff, without getting bogged down in details, which is a fantastic idea.
  5. It’s not a blood oath. Business planning shouldn’t constrain you or create inflexibility. If exciting opportunities arise that weren’t part of the business plan, you can still flex and take advantage of those.
  6. It’s a statement of intent for your shareholders. If you have passive shareholders, the business plan effectively acts as a statement on what you’re all expecting from the business. This helps create buy-in on future activities.
  7. It helps attract investment. A business plan is essential if you’re looking for new investors, because it sets out what they can expect, and how they’ll be rewarded for their contribution.
  8. It’ll help you recruit the best talent. When recruiting a management team, you need to be able to ‘sell’ the business and where you’re taking it. Business planning provides you with the clarity and the headlines to attract a top team.
  9. The planning process encourages creativity. Of course, the business plan itself is important, but so are the thought processes involved in putting it together. Business planning is a great way to challenge yourself, and it can be a vital source of creative ideas.

If you’ve never created a business plan, it’s not too late to start.  Even a one-page plan can provide much-needed direction and clarity on where your business is going.  And if you have created a business plan before, that plan should be revisited regularly to check it’s still fit for purpose.  After all, businesses evolve and goals change.

If you’d like some help with business planning, talk to Henchards.  We’ll facilitate the process, help you clarify challenges, identify opportunities, determine your goals and support you as you work towards and beyond them.

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We have talked to other business owners and they are taken aback that we forecast our revenues, costs and cash flow

Meret Maynard
Outspoken Projects

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We’ve written a number of guides on selected business subjects that will set you and your business in good stead for whatever future you may choose.

These are free for you to download and to make use of in your business, so please help yourself.