Courtesy of Brian Phillips, VP of Commercial Lending at Bank of Washington.
A business plan is the road map to success for any business. It is a tool that can help businesses create goals, track progress, help pivot to new income streams, and guide decision making for future growth.
First, a Summary of the Categories to a Business Plan
A brief description of what is laid out in the plan.
What is going on in the industry that you are in? What are the trends, pitfalls, and conditions of the market today?
What is the competition like? What are they doing that is different than you? What are they doing that is the same as you?
How you will carry out your plan.
What is the going to look like in 1-3 years financially.
How are you going to attract and retain clients?
Now that we have an understanding of what a business plan can be, let’s look at why it is important to have a working business plan in place.
5 Reasons to Have a Business Plan
1. Critical Decision Making
Having a solid plan in place will help your business make critical decisions that will affect the future outcome of your business. Having the ability to examine where your business is at any given point allows you to make the most informed decisions.
2. Celebrating Wins
Once the benchmarks are set in your business plan you’ll have milestones to hit. Once you achieve your planned goals you can celebrate the wins with your team. This gives you and your team a sense of pride and purpose for the business.
3. Making Difficult but Necessary Changes
Sometimes it’s hard to own up to the fact that maybe your activities or products/services offered aren’t in the best interest of the company’s financial well-being.
Let’s say you’re selling coffee tumblers and coolers. You spend most of your time, talent and materials on the coolers but have discovered the coffee tumblers have a larger target market, better scalability, and are higher profit margin.
Having a business plan can help you identify and implement a change in resources and focus to the coffee tumblers. You can’t just tell your people to sell more coffee tumblers. There must be a plan in place that identifies at what threshold a change is warranted and a detailed plan of how to execute the change.
4. Future Financing
How much confidence do you think an investor or bank will have in your business if you don’t have a business plan in place? You want to demonstrate to them you have good business acumen and understand the ebbs and flows of your industry and business.
Being able to see your dream come true, in reality and not just on paper, can give you the confidence to make good business decisions. This also creates pride and purpose amongst your staff and establishes your business as a cornerstone in your market.
Reach out to Brian Phillips, VP of Commercial Lending at Bank of Washington.