Why it is Worth the Effort to Write a Business Plan
Are you thinking about
approaching a Bank for finance to support your business? If you haven’t
already gone to see the Manager then you may not know that the first thing
he will want to see is your Business Plan.
Perhaps you are not convinced
that all the time and effort needed in preparing a plan is essential; if so
then 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 convey
your vision for the business as successfully as a perfectly put together
Business Plan. It provides a clear understanding as to what you want to
achieve. It allows you to express your ideas in a clearer manner.
2. Too
many times 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 at the
start. I think you can guess the outcome of many of those requests!
3. A
Business Plan will help convince both you and the Bank of the project's
feasibility and viability. There's nothing like having all the facts in
front of you to clarify the key issues
4. There’s
no getting away from the fact that a business owner who plans ahead comes
across as being more ambitious and more focused. A well prepared Business
Plan demonstrates you have vision and that you know what you want
5. With
numerous ideas floating around in your mind, the pitfalls or stumbling
blocks to success are never that visible. A mind buzzing and full of ideas
will rarely achieve clarity. A Business Plan forces you to put your ideas
down in writing and in an orderly manner. The result of this could be you
going in a completely different direction than you initially thought of, or
even abandoning your idea altogether. Not a pleasant thought, but which
would you prefer? The loss of your hard capital or the opportunity to
re-think your idea?
6. It
is an ideal tool to monitor progress against the objectives you have set
yourself (we will cover objective setting later). By checking progress
against your Plan, you will be able to spot if you are moving away from your
original vision and so you will know what has to be put right
7. Imagine
if you didn't have this check in place; an unnoticed change in direction or
a slippage in achieving your objectives, if left uncorrected for too long,
could be fatal to your business. On the other hand, it may transpire that a
shift from your original vision could be a better alternative, but at least
recognising this change allows you to adjust your course in a planned,
structured and controlled manner
8. Every
action you take has a consequence, and a Plan helps make these consequences
much clearer. Being aware of the possible effect of your chosen direction
allows you to plan ahead, leaving you better able to cope with whatever the
world of self employment can throw at you. This is one thing that "mental
planning" would not achieve
9. Putting
your thoughts on paper may make you realise that you need to do more
research on the demand for your product or service. It could also highlight
that more investigation on your competitor's products or services is needed.
Additional research could help avoid a potentially costly mistake or even
uncover a hidden advantage, which you had not seen before!
10.
A Plan will guide you as to how
much money is needed to make an idea work. In your mind you may have a rough
figure of what you’ll have to commit, but until you do a Cash Flow Forecast
you may not realise that an overdraft limit will be required, in addition to
a loan for your equipment. If the mention of preparing a Cash Flow Forecast
brings you out in a sweat, don’t worry as later in the book I’ll be showing
you exactly how to do one
11.
A Business Plan will help you get
funding. One of the main reasons Banks turn down requests for loans is a
lack of information to assist in making an informed decision. If the Manager
doesn't have enough knowledge about your idea or business then he won't feel
comfortable enough to support you. He has to understand your business before
he can say yes. Some time in the future he may have to justify to his
superiors why he lent you the money, so he needs as much information as
possible to back up his decision. A Business Plan will make him feel much
more at ease and so more able to say yes
12.
By the time you have finished
writing your Business Plan you will have a total understanding of your
business; its strengths and weaknesses, the environment it operates in, what
could potentially go wrong, and what you can do to ensure your success.
Doing your planning on the back of an envelope is not going to achieve
this
You should realise by now
that it's essential to have a Business Plan; it could be the difference
between success and that dreaded "f" word - failure! It's all about
understanding the importance of planning ahead.
Spend time putting your
thoughts on paper in a structured and logical manner. It will pay you
dividends, both in getting the Bank to take you seriously and securing the
future of your business.
© Robert Warlow
Small Business Success
More information on
dealing with banks can be obtained from Rob’s latest e-book ‘The Secrets of
Getting Your Bank Manager to Say Yes!’ at
http://www.smallbusinessloansecrets.com
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