A business plan is a roadmap that sets out your route for the development of your business. It doesn’t tell you just about the current state of the business, its strengths and its weaknesses, it will also show up the opportunities and what needs to be done to stay ahead of the competition.
You might think you know all this now and don’t have to write it down. But what if something happened to you and someone else had to take over the operation? What would they need to know so it was still there and profitable when you returned? This is the kind of information contained in your business plan and its good insurance against the unknown.
It clarifies your objectives
What are your goals? These will be in your business plan, the original goals you had plus any additional objectives that arise in the course of business. Your business plan spells out the goals and shows the milestones along the way that tell you how close you are to achieving them. Goals are flexible and can be as varied as achieving a certain level of turnover or simply acquiring new customers. It’s important, however, that each is presented in the same way – as a target with milestones or indicators that will let you measure how near you are to achieving it.
It contains your business vision
A vision is your description of how the business will look at a specific date – usually three or five years from the time the statement is written. This is another part of a business plan that’s regularly updated and describes how the business will look from the outside (to customers) and from the inside (to management and staff) when it has achieved the goals that are presently set.
It outlines your company’s mission statement
The mission statement is another expression of the businesses’ long term goals. The mission of all businesses is to conduct profitable business of course, but it should also have other intangible goals covering such issues as morality and ethics. How do you want your business to treat its customers? How does your business want to treat its team members? The mission statement is both long term and ongoing - a statement of principles of business conduct and behavior that rests above the metrics of commerce.
Cover all the management essentials
Businesses are organic in nature, changing constantly but always with growth in mind. Your business plan is also organic – an ongoing record of the changes in your business as well as a structure for the changes that will take place in the future and their intended consequences. Here are just a few of the many possible elements that can be incorporated into your business plan:
- Your products – The present and planned range of products you sell, together with any product development your firm undertakes to create its own products
- Your management structure – A statement of positions, responsibilities and authorities
- Your finances – How the business is funded and how it will repay its loans, your company’s credit policy and how it will be enforced
- Your marketing plan – How your business will be marketed, the promotional budget, the target market, future plans for expansion, and
- Your succession plan – When you intend to leave the business and how you will realize its maximum value
Every business should have an up-to-date and functional business plan. It will tell you where the business is going and how it’s going to get there. It will focus the efforts of you, your management and the rest of your team on the drivers that will bring you what you want from the business. It is, in other words, a map to the future of your enterprise.
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