Why Is A Business Plan Important?

If you are an aspiring entrepreneur looking to set sail on a journey to launch your own business, or an existing business owner who is looking to take your business to the next level through expansion, a business plan is a critical element to your success.  Most people have heard about business plans, but what should it really include?

A well written business plan takes your ideas, dreams, objectives, and vision and creates a comprehensive and detailed plan of action with one major goal: to increase the likelihood of success for your business.  A business plan should explain in great detail how you intend on accomplishing your business goals, and should be both firm and flexible.  In other words, if you find yourself changing fundamental components of your business plan in a short period of time, it isn’t accomplishing its objective.  While it is important for a business plan to be flexible in certain situations, it does need to be firmly and effectively written in order to maintain focus on your overall goals; because of this important fact, putting together a business plan involves a great deal of planning, thought, and research. 

Another vital purpose of a business plan is to attract investment – whether it be from private sources, financial institutions, non-profit business development organizations, or any number of other areas.  Often, a business plan will be viewed upon as a sales tool (or a sales pitch in some situations), which establishes the objectives and goals of the business while backing up this plan with a detailed set of financial projections.    

What is a business plan?

A well written business plan should include a wide range of critical pieces of information about your business, including:

Objectives – Your objectives would include both short-term and long-term goals for your business and should be constructed with great care, as this establishes the intended direction of your business.

Values  – Your company values consist of the set of guiding principles and core beliefs your company projects to display, including respect, inclusion, honesty, eco-friendliness, and so on.

Business background – This section should outline in great detail the background of the business, which may include company history, current status of the business, and other important elements.  This section allows the reader to understand the back story of your company.

Products and services – In this section, a detailed explanation of the products and/or services your company offers (or intends on offering) should be available.    

Operations – The operations section should outline the process your company takes to achieve it’s organizational goals, including production, logistics, human resources, and more.

Industry analysis – This section should outline the overall industry in which your company operates, focusing on historical data, research, projected future trends, expenditure and demographic information, key economic drivers, and more.

Competition – It is important to not only be aware of your competition, but understand your competition in as much detail as possible.  Information on your individual competition as well as an analysis of the overall competitive landscape would be important illustrate in this section.

Marketing plan – This section outlines how you intend on promoting your product and/or service, a detailed analysis on your customer base (including demographic and expenditure data), a detailed analysis of your pricing structure, an analysis of the overall market, and much more.

Financial projections – A critical part of the business plan, this section will illustrate your start-up (or expansion) capital requirements, detailed balance sheets, cash flow analyses, income statements (or profit and loss statements), operational expenses, revenue projections, profit margin breakdowns, and more.

In general, business plans help you plan for both the present as well as the future, and equip you with the knowledge necessary to make important decisions which will affect your business both in the short-term and long-term.   

A well written plan will also allow you to consider every element of your business, from operations, employee scheduling, logistics, transportation, dealing with suppliers, marketing strategies, profit margins, financial ratios, and much more.  A business plan needs to be very detailed; if it is too vague and general, it will not accomplish its intended purpose.

Business plans also:

  • Allow you to set the overall values, vision, mission, and objectives of your business on a high level
  • Allow you to track your progress in a number of areas, allowing you to make adjustments and improvements whenever necessary
  • Allow you to understand the market, your customer base, your competition, and the industry
  • Allow you to understand the your organizational costs, desired profit margins, and price points
  • Allow you to effectively predict your capital requirements, projected revenue, sales, and income by creating proforma financial statements identifying quantitative data in as much detail as possible
  • Promote your business to potential investors, which is often a critical element of both starting a business and expanding a business
  • Allows you to plan effectively for success and operational growth; if a business is growing too quickly, it may sound like a positive thing, but if a growth plan is not established then this positive situation can quickly become a negative one
  • Allows you to better understand industry trends, including historical trends, the current industry landscape, and projected future trends
  • tigate risk by planning every element, and taking into consideration every aspect of the business.  If a business owner creates a detailed and comprehensive business plan with all sections considered, the likelihood of success tends to escalate

In summary, it is critical to your business to develop a comprehensive and detailed business plan for a wide range of reasons. If you would like to learn more, Aspire Business Planning Services can help – visit https://aspirebusinessplanning.ca/ to find out more.

Aspire Business Planning Services
1959 Upper Water St, Suite 1301
Halifax, NS B3J 3N2

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