A Business Plan is much more than a tool for investment or for showing your commitment to your company. You will use it to monitor your progress, hold yourself accountable and to control your business’s fate. And of course, it’s a sales and a recruiting tool for courting key employees or future investors.
Writing out your business plan forces you to review everything at once, and more importantly it will force you into long term thinking; your value proposition, marketing assumptions, operations plan, financial plan and staffing plan can all be assessed for the future and your growth. You’ll end up spotting connections you otherwise would have missed. For example, if your marketing plan projects 5,000 new customers by year two and your recruitment plan is to bring only two additional sales people, that forces you to question; How can two sales people generate 5,000 customers? The answer will lead you to conclude that forming partnerships, targeting distributors and concentrating on bulk sales to large companies would be your best tactics to match the direction you are taking.
As part of your operational plan, you’ll set major operational milestones, which will allow you to focus on the ins of your company. When you’re the founder, the only person holding you accountable to those results daily, is you. Your plan will become the baseline for monitoring your progress. If your prototype is to be completed by April 1, and it gets done earlier by February 15, you can ask yourself why. Of course, there is a satisfaction to be gained from getting it done early, but the experience you will get by asking questions will be invaluable in your development. Was there an unexpected breakthrough? What milestone did the breakthrough come in? Did someone put in an heroic effort? Or did you simply overestimate? Whatever, the answer will help you learn and do an even better job next time. It will also allow you to set the right expectations.
But even more than a document for learning, a Business Plan is how you drive the future. When you write down, “We expect 1000 customers by the end of year one,” it will not be a passive prediction. You don’t just wait for the customers to show up. It becomes your sales force’s goal. The Business Plan lays out your targets in all major areas; sales, expense items, hiring positions and financial goals. Once laid out, the targets become performance goals.
And of course, a well written Business Plan is great for attracting talent. When a prospective candidate asks to understand your business, you can hand them a plan that gives them an entire overview. Their reaction will tell you something about how quickly and thoroughly they can think through and understand your business’s key issues. Plus, the written record of your goals along with a track record of delivering towards those goals sends a message loud and clear; you understand your business and can deliver the results you promise. Great employees will respond to that message, as will banks and investors when you need to raise money for growth.
Viewing your Business Plan as a fund-raising tool is just the beginning of the story for your Business adventure. You’ll use the plan for so much more, for managing yourself, for managing your goals, for operating the business and for recruiting.
Before deciding to skip your planning phase and just jump in, it is best to consider all the implications and what they mean for your future success.
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