Introduction: What is a Business Plan
Every company from start-up to scale-up, small, mid-sized and large enterprise needs a business plan.
At its core a business plan is way to organize your company’s direction, set objectives and strategies and tie them to action plan and financials. The result is a tool that allows everyone involved in the company, internally (ownership, management and staff) and even externally (investors, suppliers, clients), understanding how the company plans on being successful.
This article will talk about key benefits generated by building and executing a business plan.
What are some Benefits of having a Business Plan?
Become More Focused on What Matters
It is important to be organized. Our thoughts are often scattered, and we do not know what to focus on. This can lead to not achieving our goals or not prioritizing the things that we needed to do.
The first step in becoming more focused company is understanding what you want to do and why. Once you have a clear goal, it will be easier for you to prioritize your tasks and create a plan of action.
Consensus is a group decision-making process that helps to build buy-in and trust among the team members.
Building consensus pays big dividends once the business plan is complete as those involved will feel empowered to follow the plans direction and execute the action plan.
Team work is essential for the success of any company. If a team is not working together, it will create significant inefficiency and missed opportunities. Teams need to make sure that they are in consensus and are moving in the same direction. For example, if a team is having trouble making decisions on what they should do next and have issues with cohesion, then productivity is greatly reduced. We all share a culture at work – a team culture that is built into a well laid plan will result in a more productive and successful organization.
Analysis Leads to Better Results
In order to solve problems and make decisions, it is important to analyze the situation. One can do this by looking at the past, present and future. Business plans are a catalyst for this analysis to happen. The best business plans always start with analysis so the plan can be based on more facts than were available before the process started.
Good internal and external analysis will lead to a better perspective on the current situation and future direction. This will help with understanding what is going on and how decisions made now might affect the future of an organization. Analyzing the competition and understanding the market is a key to developing winning strategies.
A company should know its strengths, weaknesses, opportunities and threats in order to develop a winning strategy. This is because it will be able to avoid making mistakes that could have been avoided if these were identified beforehand.
Develop Winning Strategies
When a business has good analysis to review and has the decision makers and business function leaders at the table, this is a recipe for great strategies and potentially new direction that can raise the organization to new heights. Examples of new strategic direction that have paid big dividends for other companies are: 1. Re-Inventing a Product 2. Creating an Innovation Focus 3. Cutting Costs/Reducing Waste. By having good analysis and the right people involved in the planning process your organization can decide what strategy is the right direction for it.
Get Alignment in Your Organization
Financial projections are an important part of any business plan. They can be used to help determine which strategies can be achieved and objectives can be met. A profit and loss statement or an income statement is a good start. This alignment will ensure your companies knows it can afford to do what is in the plan and prepare it for any new cashflow or financing needs.
The benefits of completing a business plan are vast and far too numerable to mention in one article. A business plan can help you identify winning strategies; it helps you to stay focused on your objectives, and it can be a great resource during tough times. For many people, the idea of writing a business plan can seem daunting. But the truth is that it’s worth the investment because there are so many benefits to doing so.
Steve Williams CExP™, CMMA is a Partner at Incentica Business Planning in Calgary. He is a certified exit planner and mergers & acquisitions advisor with 30 years of senior management and executive experience. Steve has completed over 100 exit strategies and strategic plans for some of the biggest and best companies.