Why every small business needs a plan

Why every small business needs a plan

September 10, 2012 by John Davis

Why every small business needs a plan/Compas over mapA business plan is the equivalent of a roadmap for businesses. It is a document that provides vision, goals and benchmarking. It creates momentum and also provides an opportunity for a reality check – what worked last year, where the gaps are and what next year is going to look like.

Many start-ups fail because they lack a map to guide them through their new business venture. A research study conducted by simplybusiness.co.uk with 400 British entrepreneurs shows that 54% have no written business plan and more than two-thirds make decisions based on gut instinct alone. According to the Federation of Small Businesses: “Britain’s best performing small companies are being hampered by a failure of the planning system to allow them to expand”.

Writing and maintaining a regularly updated plan can have a profound impact on business success, helping to demonstrate the viability and value of a business to potential investors and illustrating how investment will be used to grow sales and profit. It also provides a useful reference point and motivational tool for the business owner.

In terms of content, a plan should document objectives and strategy across three key business areas; marketing, operations and finance. These aims should be quantifiable and split between short term (next 12 months) and longer term (next three years). Other sections can include:

  1. A description of products and services – detailing the main products and services the business provides/proposes to provide in time.
  2. Market research – results of any research conducted to validate the business concept.
  3. SWOT (strengths, weaknesses, opportunities and threats) analysis – illustrating the position of the business within the market in relation to competitors and identifying areas of opportunity.

In summary, a business plan helps to focus clear roles and goals and motivates business success. As Matthew Brearley, former board director of Vodafone, said: “With a great plan you can engage others with a sense of direction and purpose, align all activities and review progress." 

John Davis is managing director of Business Centric Services Group.

Comments

That is very true every business needs and should have a plan. If you work according to the plan you will know where and how did you started. Not only this but you will also know the next path to go. A document stating all the features and functions of your business is also must. 

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