Any small business needs a plan. Even if it is only a one page piece of paper on the fridge, some form of plan is critical to business success. The business plan purpose is primarily to force small business owners to look at their industry, products, operations, management and finances. From here they can set business goals and objectives.
While the process of analysis is extremely beneficial, the business plan purpose also extends into other areas including using the plan to monitor and grow the business, obtain finance, sell the business and even motivate employees.
Purpose 1: Critical Analysis
Simply undertaking the planning process itself forces you to critically analyse all aspects of the business. You may already think you do this regularly (although not formally with pen and paper), but do you truly cover all facets of your business?
Do you continually look to your customers, competitors and industry for new trends, ideas and opportunities?
Are you on top of your finances and cash flow position?
Have you set goals and objectives and put in place the planning for your business for the next 6 months? 12 months? 3 years?
Do you know what marketing is working for your business and have forward planning in place for advertising, promotion and web marketing?
If you answered NO to any of these questions, it’s time to implement or revise your business plan. All of these questions, plus many more should be answered in the plan.
Even if you are a solo, home-based business, you need to critically analyse your business and have a plan. Like anything, if you don’t have a map, you won’t get to your destination.
Purpose 2: Monitor, Maintain and Develop Business
So now that you have your small business plan in place, it needs to be reviewed regularly. Another key business plan purpose is to provide a tool to help monitor, maintain and grow your business.
Set business objectives, put plans in place, monitor results and make adjustments as necessary. Taking the time to regularly spend on your plan and revising it will go a long way to ensuring your business growth and success.
Purpose 3: Funding and Investment
Many small businesses require bank funding or seek investment. In this situation, the business plan purpose is to act as a financing proposal.
Just by having a plan will put you in front of many other small business owners and certainly be viewed favourably by lenders and investors. In fact, some will not even give you a second glance without this information.
Purpose 4: Business Sale
Although it may seem pointless if you have reached this stage in your business, a well written business plan will help not only sell your business, but could result in a higher price. It will indicate to prospective purchasers that the business is well planned and give some security that a road map is in place for the future.
Purpose 5: Employee Morale
Another underestimated business plan purpose is to use the plan to keep employees informed about the business. While some business owners may cringe at this thought, it is a great way to get staff involved in the business, encourage feedback and help implement the plan.
It is not necessary to give the full plan if you don’t want to include sensitive information such as financials. Whatever format you present it in, staff will gain an instant sense of ownership and involvement that could prove very valuable.
