ArticlesBlog

Purpose of the Business Plan

Purpose of the Business Plan


Business plans are written for many
reasons. First and foremost, prospective business
owners write business plans to present to potential funders to secure funding
for their business. All commercial lenders require comprehensive business
plans as do the majority of micro lenders, angel investors, and government
funding sources such as state VR agencies, the Social Security
Administration, and one-stop Career Centers. Some family
members even require a business plan in order to loan money to the business,
which can be a smart strategy. Business plans document that the concept has been
well researched and supported, and that the financial projections demonstrate
that there is money to be made. So lender’s of any type ultimately
want to get their investment back it is critical information to document. So in
the majority of cases were funding aside a business plan is a requirement. Beyond
this though, the writing of a business plan itself has tremendous utility.
The business plan offers a vehicle for ensuring that all day-to-day components
of running the business have been considered. They force prospective
business business owners and team members to think systematically about
each and every part of running the business and help to identify potential
gaps. Are there supports available for all services or tasks that require it?
Are there gaps in the supply chain or the customer service strategies? Do you
have a solid contingency plan if the supply chain breaks down or if actual
sales wind up being two times greater than were projected. It can be easy to
miss these items when you’re working on researching each individual component
part, such as developing marketing strategies. Writing the business plan
requires that the entire team sit down and begin to go through a start to
finish plan for each and every specific area of running the business and it is
much more difficult to overlook something critical with this approach.
Generic business resources frequently cite that the single best strategy for
minute minimizing potential risk is the development of a comprehensive business
plan. The business plan also serves as a
roadmap for running the business. If actual sales do not hit the projected
sales it can be helpful to go back to the marketing and sales section of the
business plan. Many times we find that prospective business owners and team
members have been more focused on the production and have left the targeted
marketing strategies slide. Perhaps they were planning on attending
weekly local business connection meetings and then got caught up in
filling orders and prioritized this over getting to the meetings. When sales begin
to drop, they review the plan and realize that they are missing many of their key
marketing opportunities. Without a plan it can be harder both to check and
balance actual daily activities against the targeted ones, as well as to reassess
or evaluate what’s working and what’s not. Remember all business plans are
working documents and it should be updated and revised regularly to reflect
new information trends and outcomes.

Comment here