Why your small-scale business needs a business plan

If you run a small business or own a ‘side gig’, then you really do need a business plan.

First, what is a business plan?

A business plan simply put, is a written and drawn layout of goals, objectives and strategies you have for your business.

There is usually a misconception that a business plan is only needed if you intend to seek funding from investors and/or the bank or if you plan on selling your business.

While these are part of the ‘WHYs’, they are not the only reasons your business needs a plan. If you are yet to find out, keep reading.

Reasons why you need a business plan:

1. To determine the viability of your idea

So you have an idea, great! Now what? Do you go straight ahead into executing your great idea, no!

You need to determine the feasibility of your idea, the possibility of turning an idea into¬† a reality and also passing the longevity test, a phenomenon referred to in business accounting as ‘going concern’.

Before you dedicate ample resources and effort into nurturing your idea, you need to know the possibilities and opportunities that are available, the obstacles and challenges that might deter your idea or business from being profitable or from surviving.

For example, if you plan on running a service based business , you most likely want to be profitable and better still exist for the longest period possible.

To achieve these goals, you need to do a proper plan that reveals if these great ideas you have are not only attainable but can thrive and survive.

Improper planning is one of the major reasons many ideas and businesses are birthed but die before reaching full potential.

The viability of your idea or business depends on several factors:

  • Availability of a market or demand for your product or services
  • Favourable industry and market factors
  • Your value proposition and strengths
  • Surrounding setbacks, threats and entry barriers
  • Competitive structures and pricing

A business plan would help you analyze all this factors, bringing into perspective whether to forge ahead with the business plan or not and things to consider if you decide to go ahead with building the business and nurturing your idea.

2. To give you a drawing board to fall back to

You business plan gives you a blueprint that you can always to refer to especially when you feel like you have strayed away from originality and business vision.

Crafting a business plan requires you to write out your goals, vision and mission. You get to establish the ‘WHY’ of your idea and business and also understand what drove your passion and ideas in the first place.

It helps you maintain your brand and originality especially in a saturated business world filled with diverse variations of your idea or business.

Drawing up a business plan motivates you to keep pushing until you achieve the end goal. It also provides a written vision to guide partners and staff who join you along your business journey.

You have guidelines that align with the vision board set in your business plan and everyone is aware of how their actions and areas of operation contribute to the overall goal and plan.

 

Business Plan Guide

Download your free guide for building effective business plans.

 

3. Clarity on business, ideas and strategies

Irrespective of whether your ideas are for a profitable business or not-for-profit venture, you need to determine strategic options for effective operations.

A business plan provides clarity of strategies for growth, expansion and longevity. Once you have established the strategic goals of your business or idea, you would need to determine strategies tailored towards achieving these objectives.

Once again, this is where your business plan comes into play.

You are able to experience clarity from the details of your plan as it regards:

  • Growth and expansion strategies
  • Marketing to promote your brand, ideas and business
  • Pricing if you decide to sell a product or service
  • Human resources, if you need additional hands to manage and run your ideas
  • Supply chain management for your supplies and inventories
  • Production activities and customer satisfaction

and much more.

A business plan will highlight opportunities for enhancing your business value chain and maximizing your resources for better deliverability and growth.

4. Seek funds, investments or sell out

Sometimes you may find out that your ideas and businesses have grown bigger than you initially planned and you may need extra funds to further fuel this growth.

Your business plan can help you secure funds and loans from financial institutions, get partnerships and investors or even sell out to a buyer.

Because a business plan is a rolling document, which means you can always update it as your business grows, you can definitely enhance it and make it more appealing and detailed for investors and fund seeking purposes.

Even if you have built a very simple business plan just for clarity purposes, this can be improved upon to reflect extensive growth opportunities and financial profitability possibilities to attract funds.

If you have been thinking that you would never get to the stage of trying to seek investor funds or draw out a bank loan and worse, sell your hard thought idea and business, I hope the other three reasons are good enough for you to get your laptop, pick up a pen and note pad and start drawing out a plan for your idea and business.

Building a business plan does not have to be a daunting process, you can get one by:

  • Doing it yourself (DIY)- This is usually ideal for smaller, non-complex business ideas.
  • Employing expert services- If your idea or business is envisaged to be big or complex and most importantly, if you need investors and funding, then it is advisable to get expert help in building an appealing business plan.

If you plan on building a business plan by doing it yourself (DIY), I have got you covered.

Download a simple business plan guide below.

Business Plan Guide

Download your free guide for building effective business plans.

 

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Do not forget to download your business plan guide here

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