You know you need a business plan. But did you know that people who have a business plan and follow it have twice as many opportunities for success as those that don’t?
In fact, research has shown that those with a business plan are more likely to:
1. Secure funding – 36% were successful with a plan compared to only 18% without a plan AND
2. Increase business – 64% saw growth in a 12 month period compared to 43% who stayed the same, decreased or closed altogether.
Researchers say that “Except in a small number of cases, business planning appeared to be positively correlated with business success. While our analysis cannot say that completing a business plan will lead to success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to run a successful business.”*
*Statistics from – http://timberry.bplans.com/2010/06/real-data-on-the-success-of-business-planning.html
But these aren’t the only advantages to having one, here are my top ten reasons that you need an up-to-date business plan:
Taking the time to stop and reflect on your business, what you’ve achieved, what you want to achieve and how you’ll achieve those things, is not only essential for your business it also gives you a great sense of clarity about where your business is going and how you’re going to get there. The process of developing and evaluating your business plan is an excellent way to gain clarity around your business goals.
Your vision is an important part of your business. What you see your business potentially becoming is just as important as how you see your business right now. Its one thing to have a vision, but have you articulated it clearly. A business plan gives you the opportunity to clarify and express your vision in a way that others can understand and relate to.
Without a plan, things happen haphazardly and by chance, the problem is that while sometimes this works, sometimes it really doesn’t. Not knowing whether you’ll have enough money to buy stock next month or how much stock you should be ordering, is like driving your car blindfolded, maybe you’ll get there, maybe you won’t.
Some people look busy but they don’t get anywhere because their actions aren’t directed to the right tasks. You need to be clear about your goals before you can take the action needed to achieve them. A business plan will give you the tools to set out your goals and also help you to map out the pathway of action to achieve them.
Without a business plan you can waste a lot of money. Not knowing which things to spend money on, spending money now when you should be saving it for a bigger project coming up later. Not knowing your monthly expenses or how much your income targets should be are all ways you can lose money without a proper plan. Your financial plan is an essential component of your business plan and a realistic estimation of your future projections can help guide your decision making.
Time is an even more precious resource than money, you can get more money but you can’t get more time. When you have a business plan to follow your time is spent taking the steps you need to take to reach your goals instead of wasting time on tasks that aren’t bringing you a return on investment.
Attracting the right people to work for you doesn’t happen by chance. Your business plan gives you the guidelines for the people in your team you need to attract. As your business grows you’ll find you can’t do it all by yourself and finding the right staff can be the make or break for your business. This is something you really don’t want to get wrong.
Similarly attracting the right customers doesn’t happen by chance either. A key component of your business plan should include identifying your audience. Knowing your ideal customer and things about them such as who they are, what they like, where they live, what makes them tick are the kind of things that your business plan should help you identify. Understanding your niche has benefits that flow onto other areas of your business including product design, your marketing message and even your advertising budget. Trying to appeal to everyone by not knowing or understanding who your real audience is, can be both costly and a waste of time and resources.
A successful business is what we’re all striving for, but how can a business achieve success if they haven’t defined what success will look like for them? If they’re waiting for the day they’ll become a millionaire, without a clear map of the steps they’ll need to take to become one, they may as well just keep waiting. On the other hand if they’ve mapped out exactly how much they need to make each day and how many products they’ll need to sell to make one million dollars and the resources and team they’ll need to do that then they have a far better chance of reaching that goal. Having a plan allows you to know what questions to ask, what goals to strive for and what needs to happen on a daily, weekly, monthly or annual basis to grow your business. As Confucius says “Man who plans for nothing, gets what he planned for.”
10. Health & wellbeing
If you don’t run the business the business will run you. Not having a business plan can have an impact on your whole life. With no clear boundaries around your time and always more work to do, it’s easy to get into the habit of working almost 24/7. This ‘workaholic’ lifestyle eventually starts affecting your health, your relationships with friends and family and ironically even impacts negatively on your business. This is not how your relationship with your business should be, your business should be like a friend who helps you not a burden who takes the best of you. A healthy and balanced life is an important part of having a successful business and knowing what you want for your life should be a part of your business plan too.
So those are my top 10 reasons for having a plan and sticking to it! I’d love to hear your thoughts and what you’d add in the comments below.
If your business plan is needing a bit of a refresh, we’re running our business planning online program in very soon, read more here Live your dream life 28 day challenge