Why are Business Plans so Important?
Business plans are vital to the eco-system of any business. Business plans set a direction for the business to strive towards and if communicated properly, instil the desired culture and organised nature of the business. Besides the importance to the business internally, business plans are vital when trying to access funding. Business plans communicate to both the employees and those outside the business and thus, are vital to a business’ success.
Key steps to establishing an effective business plan?
1. Study the market place: One of the reasons many start-up businesses fail is because they do not offer a service or product for which there is a demand in the market place. Therefore, before drafting a business plan, it is vital that you analyse the market and identify gaps that need to be satisfied. The importance of market research cannot be understated.
2. Innovation: Differentiate yourself from competitors. Design something that is new or plan how you will provide your product or service in a way that delivers better value than your competitors. Be creative in the process. This will define how much of an impact you have on securing your target market.
3. Build a clear vision: Know where you want your business to be at within specific time frames in the future. Decide upon clear objectives you want the business to meet, whether this is environmental sustainability objectives, profit objectives or market share, etc. Ensure that these goals are realistic and attainable within the suggested time frame. If you are planning to build an E-commerce presence, it is probably unrealistic to aim to surpass the current E-commerce giants in one year from now.
4. Communicate the vision: Invest time in ensuring that everybody within your organisation is both on board and understands the business vision. Communication is vital in this process. Gain feedback from those ‘on the ground’ as well as those at the top of the business hierarchy as they all have different views of what is impacting the business. This will enable you to come up with a business plan that everybody can work towards with togetherness.
5. Rolling Business Plan: Finally, and perhaps the most important facet of an effective business plan is a business plan that is constantly updated and reviewed over the period of its’ existence. Circumstances beyond the firms’ control change often and thus, it is impractical to adhere to a solitary plan that may have been created five years prior. Therefore, for success, business plans must be adjusted accordingly in order to navigate the macro and micro-economic obstacles a firm will endure.
My Advice: Take your time and establish a business plan that is SMART, and takes into accounts all the business’ strengths, opportunities, weaknesses and threats. Most importantly, do not leave it on a shelf to gather dust.