Understanding a Business Plan
Any talk you may have heard about small businesses managing to find success without a business plan should be viewed with suspicion. In reality, it’s far better to launch, expand, or chart the future of a small business with a clear business plan in place.
There are plenty of reasons for this but here’s the main thing: A business plan provides a defined road map for a company. That road map allows a company to state its goals for the year in a highly detailed manner. But a business plan doesn’t just map out goals—it also specifies the tactics you intend to use to achieve your goals and a timetable for measuring results.
For example, your business plan could aim to increase sales for the year by 8% and cut costs by 10%. An effective plan would also pinpoint the processes designed to achieve those goals, like hiring a part-time salesperson willing to work on commission, or using new software to be more efficient. These plans are typically broken down into quarterly reports which can be broken down further into monthly and weekly reports.
Again, the benefit here is clarity. Businesses simply cannot alter plans on a daily basis because an unfocused approach leads to confusion. A business plan is created to commit an organization to a fairly firm course of action. The word ‘organization’ was used on purpose in that last sentence: Organizations build success by getting organized!
On the other hand, this doesn’t mean that a company never changes its plans. If a month or two goes by and you’re on track to meet quarterly goals, you can stay on the same path and possibly raise your future targets. However, if the quarter ends and you haven’t come close to meeting your expectations, then it will be necessary to shift some strategies in order to get things back on track. Once again, it is critical that no plans are set completely in stone. Business plans get adjusted when the data indicates the need. And if you have to scrap your business plans completely and start anew…so be it. The ultimate goal is to succeed and not to be locked into any one particular plan.
A business plan is…well…serious business. In fact, it’s pretty close to impossible to get a business loan from a bank without one. After all, it only makes sense for a lender to carefully look over just what it is that a business intends to do with borrowed money. To take on the risk of loaning capital, a bank wants to see the details and analyze the odds of success. That’s why it can be a good idea to purchase a good business plan software program. These programs provide a reliable template on which to draft your plan as well as a series of automated functions to ensure that navigating your business plan is as easy and smooth as possible.
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