I like maps. No, really - there are four of them on the walls of my office.
I particularly like historic maps, as they provide a snapshot of the world at a particular time. But maps can be as detailed as they need to be: from covering the whole world to just a small area of a few square kilometres.
And, call me old-fashioned, but I much prefer a street map over GPS because it lets me choose the way I want to go, rather than going the way somebody else (or an algorithm) wants me to go.
But here’s the point of this: just as I would never try to get to my destination without a map, I would never try to run a business without a business plan.
But it’s amazing how many new business owners try. They are essentially trying to feel their way to an unknown destination in the dark. The chances of success? Slim to non-existent.
So, if you are in any doubt, following are six big reasons why you need a business plan.
Six key reasons why you need a business plan
1. You get to define what you do and how you do it
It's YOUR business: just like with street maps, a business plan allows you to choose the way and set your own course for success – on your terms.
2. Goals are nothing without a plan to achieve them
Simply setting goals is meaningless if you don't know how you can achieve them. With a business plan, your goals are all written down in one place and you can now allocate resources (time and money) into achieving them.
3. It forces you to think about whether your ideas are realistic
Are your goals, business model, strategy, and pricing realistic? Can it be done? Your business plan forces you to think about this - and just about everything else concerning your business.
4. It helps identify weaknesses and threats to your business
If you know where you are vulnerable before you start, you can make a plan to mitigate these factors and reduce some of the risks involved. This puts you in a much stronger position for the immediate future.
5. You can secure funding more easily
At some point, you will probably need to seek external funding - either from a bank, by crowdfunding, from investors, or even just family members. If they don't know where their money is going and how long it will take to get it back, they will be reluctant to commit. This could stall your progress unnecessarily.
6. You have a record to refer back to at any time
A business plan acts as a guide. You can refer to it in regular planning sessions, every three to six months. It can help you keep on track towards your goals – or may even help to convince you that your plans aren't working, and you need to change them. Keep it handy at all times to refer back to.
Now you know the main reasons why you need a business plan; how do you go about writing one?
The good news is that writing business plans used to be complicated: over 20 pages long and fixed documents that never changed.
These days, your business plan can be just two pages long and designed to cover only a brief period.
At Tempo Tax and Accounting, we have developed our very own Start-Up Business Plan Template, which is broken down into four simple sections:
1. The fundamentals
2. SWOT analysis
3. The financials
4. The base
This makes the process of actually writing your business plan very simple. The hardest part is getting started.