Serving over 2 Million visitors each year

Search
Lloyds TSB - Free business planning software
Open a start-up account with Lloyds TSB and you'll get a package of help and support including Free Sage Planning for Business software. Find out more.

Why do I need a Business Plan?

print  e-mail 

Do you run a business but believe that a business plan is just for starting up? Or are you one of those people who believe they just don’t have the time to plan? Well, I have news for you. Business planning is not just for start-ups; it is an essential element of running any successful business, particularly given the growing uncertainty we face and the unyielding shifts in consumer behaviour.

If you think time is the problem, think again and make time to plan. One of the key benefits of planning is that it helps you understand what you need to prioritise.

A business plan is not just a document. It is a holistic analysis of your company, the environment it operates in, and a route map to achieving success based on the resources available. Unfortunately, the image most of us have is of a 30-page bound document. The focus is on the output when the real value in a business plan is the business-planning process itself.

The following list represents some of the key benefits of planning:

1. To plan for an uncertain future

Business planning is vital to help you manage your business more effectively. By committing your thoughts to a plan, you can understand your business better and also chart specific courses of action that need to be taken to improve your business. A plan can also detail alternative future scenarios, set specific objectives and goals, and list the resources required to achieve these goals. In short, it can help ensure that you are prepared for all sorts of eventualities.

2. To help grow your business

In an ideal world, all businesses would be self-financing in exploiting business opportunities. In reality, few are afforded this luxury, and hence, will be required to secure external investment. The production of a credible business plan is one of the primary requirements for any entrepreneur seeking investment to grow.

3. To commit to a particular course of action

A business plan can help a company assess future opportunities, choose one, and then commit to a particular course of action. By committing to one opportunity, all other options are effectively marginalised and the company is aligned to focus on key deliverables.

4. To manage cash flow

Careful management of cash flow is a fundamental requirement for all businesses. The reason is quite simple—many businesses fail, not because they are unprofitable, but because they ultimately become insolvent (i.e., are unable to pay their debts as they fall due).

5. To value a business

Given that valuing firms is notoriously difficult and subjective, a well-written plan will clearly highlight the opportunity for any prospective investors, explain the value of the business, and increase the likelihood of a successful exit by the current owner.

6. To ensure all bases are covered

When you start a new business, the temptation is to spend time on the idea and then react to events as they come up rather than focusing on what is important. The very creation of a business plan ensures that you cover all the various bases you need to when taking an idea from conception through to launch.

As you’ll have garnered from the above, business planning is an essential activity, regardless of the stage of business you’re at. The very process of producing a business plan enables management to give due consideration to the various factors that mesh together to create the opportunity they are seeking to explore, as well as the resources required and the key drivers needed for success.

About The Author

Alan Gleeson is the Managing Director of Palo Alto Software Ltd, creators of Business Plan Pro® 2007. He holds an MBA from Oxford University and an MSc from University College, Cork, Ireland. For further information on business planning visit Bplans and Palo Alto Software

Latest articles in Business Plan Tips
 
Free business plan review service launched
A new free business plan review service for entrepreneurs and small companies looking to attract investment has been launched by a leading accounting firm. [June 10, 2010]
 
Top 5 trends to make money in 2010
We’ve put together what experts have told us are likely to be the top 5 money-making business trends in 2010. Get your business on the bandwagon, and you might find 2010 could turn out to be your most profitable year yet. [January 6, 2010]
 
5 businesses you can start for £100
All around you are household items that you could make and sell, technologies that you can benefit from, odd-jobs that people will pay to have done – businesses that can be started for as little as £100. We look at 5 examples in this guide. [December 14, 2009]
 
A beginners' guide to delivering a winning pitch
How to deliver a perfect business pitch, from hooking your audience, delivering enthusiastically and with credibility, to working out in advance what questions your audience is likely to ask. [July 13, 2009]
 
Pitching - how to position yourself against your competitors
It’s all very well having a competitive edge, but are your prospective clients aware? A key question when you are pitching for business is ‘how do you show your audience how you compare to your competitors?’. This often creates a dilemma for pitching teams. [July 6, 2009]
 
Turn your business into one that doesn't need you
Some businesses collapse because the owner has burned out or lost the passion and drive needed to carry on. Fortunately there is a way out other than closing or selling the business. And that’s to change your business so it no longer needs you, the business owner. [March 23, 2009]
 
How to navigate your way through the recession
Navigating your way through a recession means being obsessed with the bottom line. And if you anticipate problems, it means talking to your lenders at an early stage. [January 16, 2009]
 
Simple rules to follow when creating a business plan
For the uninitiated, creating a business plan can be a daunting task. But this document really is not that scary. Just follow a few simple rules and you can create a professional business plan that will have investors knocking down your door. [December 11, 2008]
 
How to stay ahead during times of economic instability
In the past few weeks we have witnessed a period of unprecedented economic turbulence and instability. This article outlines some courses of action that may help to reduce the sense of helplessness many businesses are currently experiencing. [October 21, 2008]
 
How to prepare your business to cope without you
As the founder of your business and the person who is the driving force, you are probably the key factor behind its success. It is worth spending some time putting in place a plan for your business to cope in your unplanned absence. [May 15, 2008]
 
An Inconvenient Truth – lessons in pitching for entrepreneurs
A number of lessons in Al Gore's climate change documentary for those of us interested in the field of business planning and specifically, the pitching of business plans. [April 14, 2008]
 
Guide to business continuity for one man bands
How would you earn money if something happened to you or your business? Here is our guide to getting a simple business continuity plan together for one man bands and micro sized businesses. [March 10, 2008]
 
Guide to successful business planning
There is a lot to be gained from business planning but many businesses will search for a million reasons to avoid it. However large or small your business is, planning for the future is critical to its success. [March 3, 2008]
 
Guide to writing a winning business proposal
A well-written and attractively presented business proposal is a crucial sales tool, which can make the difference between a winning proposal and losing venture. [January 7, 2008]
 
Securing Business Funding - The Dragons' Perspective
Some of the key mistakes being made by contestants on BBC's Dragons' Den and general tips for future entrepreneurs pitching to investors. [December 20, 2007]
 


Click Here



Our Partners
Key Services
Key Services
Useful Guides
Click Here

© Bytestart Limited 2005-2010 - All Rights Reserved | Terms of Use | Site List | Website Feeds | Rss Feed RSS Feed

Business Insurance, Business Bank Accounts, Public Liability Insurance, Professional Indemnity, Startups, Limited Company, Sole Trader