Operating your business without a business plan is like going to the grocery store hungry and without a list. You end up with a lot more than you need—a lot more than you even want—in your cart. And you’ve likely upset your budget for the week. A few such carefree adventures and your budget is out of balance for the month or even the year.
To help keep your business on track, you need a business plan. A business plan is an annual strategy exercise, detailing the business’s financial and funding information, its products or services, competitive research and analysis, marketing plans, sales plans and projections, and information about the key people and their roles. No matter the size or legal structure of your business, the discipline of writing and maintaining a business plan brings structure and organization to the business and validation and motivation to the owners. This can be an especially important exercise for the entrepreneurial spirit. But this tool can only work for your business if you dedicate the time to write a business plan and calendar it as an item for annual review and updates.
Structure and Organization
The mere exercise of writing out the details of your business and seeing them in print can reveal unnecessary duplication in some areas and gaps in others. With this information, you can reallocate resources as needed. Proactively addressing these structural issues before they manifest as problems keeps your business running smoothly and efficiently. Additionally, businesses need cash to survive. Planning and forecasting each year is critical to understanding how sales and expenses affect cash flow. Finally, a business plan can keep you on track with long-term goals when tempting and unanticipated opportunities arise.
Validation and Motivation
Over time, comparing your business-plan forecasts with your results will provide the data you need to validate business decisions—including the updates to the business plan itself. Whether the business is meeting its targets or falling short, having your “hands in the data” on a regular basis means you can spot trends and take action. For example, consistently hitting sales targets may mean it’s time to evaluate an expansion campaign or to re-evaluate and trim the marketing budget. Consistently falling short of sales targets may mean the goals are too ambitious or perhaps the sales team needs an additional resource. Working with fresh data provides you with the opportunity to take timely corrective measures. If the data reveals an issue, it’s much less overwhelming to correct a slight deviation in course than to be forced to re-chart the entire course. On the other hand, when the data reveals growth, striking while the iron is hot to capitalize on that growth fuels the business with positive momentum.
Your business plan needs to cover a wide breadth of topics in thorough detail. The Small Business Administration provides an excellent starting point for collecting the necessary information and beginning the writing (or updating) process:
When you begin to write or update a business plan, consider your audience. If the business plan will be an internal document, you may be able to handle the process yourself. Consider consulting with your business planning attorney and your tax professional to gather and discuss some of the necessary information. If the upcoming business needs include financing, additional investors or owners, or anything else that may include an external review of the business plan, the business plan must be extremely well prepared, with information relevant to the decision process. In this case, you may want to consider hiring a professional business plan writer to take your draft to the next level.
Companies that have written business plans tend to perform better. Writing and maintaining a business plan can be challenging work, but the benefits greatly exceed time and effort. While some business owners are comfortable writing their own business plans, many business owners discover significant benefits after working with a business planning professional. We provide business planning services for the complete business lifecycle, including shaping initial ideas, deciding upon and implementing the right legal structure, crafting a comprehensive business plan, and more. Give us a call today so we can discuss the next steps to getting your business plan underway.
Call the Business Law attorneys at Pratt Law Group at (972) 712-1515 to schedule a consultation today to learn how we can help you manage risk.