Joseph Cuschieri
A business plan is a very important business and strategic tool for entrepreneurs irrespective of their size and scale. A good business plan not only helps entrepreneurs focus on their business goals, strategy, and performance, but it also helps them achieve short-term and long term objectives. Benjamin Franklin once said, “If you fail to plan, you are planning to fail”.
There are different schools of thought arguing that business plans are not necessary or irrelevant and other arguments which claim that business plans are too restrictive and may have an impact on the dynamism needed in today’s economic environment. Of course not everyone agrees with that. I am firmly on the side of sound business planning and that business plans can be effective tools to achieve the desired results.
The following are the ten reasons why business plans are needed:
- Financing purposes: If you are interested in raising capital from investors, seeking partnerships or join ventures or obtaining financing from banks and credit institutions, a mere description of your business concept is not enough. Instead, ensure that you have a sound business and financial plan which demonstrates your long-term objectives and the sustainability of the business model,
- To make sound decisions: A business plan helps you define your strategy, goals but most importantly, it helps you in resource planning, technology development and investment which add value to the business,
- Communications: A business plan is an effective tool to communicate your business goals, strategy and vision to all your stakeholders both internal and external,
- Clarity: Putting together a business plan (or an investor deck) helps you think things through more clearly in terms of what you’re doing and where you are going,
- Understanding of your market: The process of building a business plan, helps you understand better your competition, products, the market you’re operating in, but most importantly, the risks your business is facing,
- Organisational behaviour: A business plan which involves different teams during its development, helps your company to stay focused, disciplined and organised to remain on track. Creating a plan with P&L projections, revenue forecasts, financial and performance KPI’s, helps you remain committed to the long-term goals,
- Hold yourself accountable: A business plan is a great tool to articulate your vision and future plans for your company. Once your plan is written down and disseminated internally, it will serve as a guide to track progress and hold yourself accountable but it also allows you to know when a change in direction is needed,
- Benchmarking: A business planning process helps you to benchmark your performance with that of your competitors (and peers) but also in setting KPIs for the business and the team,
- Financial planning: A business plan helps the team in resource planning, setting priorities, programme management, financial modelling and ROI projections which as a result sanitises what is achievable based on the financial resources available,
- Identify potential weaknesses: A business plan helps you assess the risks and gaps in your organisational setup and any pitfalls which may limit your business performance. Bouncing ideas with external experts and professionals can be useful in rationalising your plan.
While the above points all support the importance of having a sound business plan, one should never overlook the human element. The success or otherwise of a business, depends on the quality of its team and its people. Creating an emotional bond between the team and the organisation’s vision, culture and values, guarantees higher levels of performance and will give you an edge on competition. Business planning is a journey which can be fun if managed in such a way that it creates higher levels of employee engagement across the whole business.
A business plan should be treated as a roadmap, continuously under review, but one should not miss out on opportunities as they arise even if they are not part of the business plan. A company needs to have the ability and agility to tweak its course when the need arises.
