What is a Business Plan? A business plan is simply a formal written document, often times updated annually, that contains the strategies for achieving those plans, the time frame for the success of those plans, and the specific goals for making such plans happen. A Business Plan is very important for a company in so many ways. It lays out the vision and mission of the company and its founders. It also often includes information regarding financing, marketing, sales, research & development, and other aspects of running a company.
For many people reading through a business plan can seem a bit boring or tedious. However, a well-crafted, formal business plan helps to ensure that the investors and other personnel involved in a venture are focused on what you want them to see. For example, if you are a young entrepreneur looking to raise seed money from a group of angel investors, your business plan can inform potential investors of how your business will use the funds, how it plans to use those funds, the expected end product, and whether or not the company has any ready-to-use products or services to offer as an alternative. In essence, your business plan informs the investor of what they should expect to see once they hand over their money. Such information can be rather difficult for an untrained eye to digest.
The idea of having investors invest in your company is to create long-term value for them. Unfortunately, many entrepreneurs and new business owners don’t provide investors with the detailed information necessary to justify such an investment. Without such detailed information, most investors simply do not have enough information to make informed decisions. This makes it almost impossible for new businesses to survive the first year on their own. Therefore, if you are planning to hire a consultant to help you design and develop your formal business plans, take into account that this investment will likely be a one-time affair.
In terms of your business plan helps develop your long-term competitive advantage, it’s important that you stay aligned with your target market. As mentioned above, your goal is to increase customer satisfaction and customer retention. However, if you are operating in an industry where your target market is constantly changing, you must remain flexible enough to adjust to the market conditions. For example, if your target market changes every year, you’ll need to change your marketing strategies to accommodate these changes. Similarly, if your target market changes by six months down the road, you will have to adjust your strategies accordingly.
One final way that a well-constructed business plan helps you to increase your long-term success is that it provides you with a framework to work around. In other words, by providing investors with a clear picture of what you are trying to accomplish, your business plan helps you show them where you intend to get to. Once again, this is something that a consulting firm can provide you with. Such a company would be able to analyze your competition, as well as the market conditions in which you operate, and come up with realistic plans that will help you achieve your goals over the long-term.
Finally, a well-constructed business plan provides you with the ability to develop goals that are aligned with your own personal growth and vision. Far too often, start-ups are focused on achieving a particular number of sales or clients before moving on to other goals. A solid business plan provides you with the ability to expand beyond that initial number of clients. Ideally, you should develop marketing plans, quality management plans, growth plans, and more. That said, if you do not have a well-constructed business plan, it is very likely that you will not move in a direction that is in alignment with your own personal goals and interests.