It might be a well-worn cliché, but it remains true – planning without action is futile, while action without planning is fatal.
Having a well thought-out business plan doesn't guarantee success for your new business. Things won't always go your way and you can't control everything that might affect your fledgling enterprise. But if you don't have a sound business plan, which details your goals and strategy, you're significantly more likely to fail.
And as well as offering a useful benchmark against which you can judge your performance, business plans can prevent you from making bad decisions.
If you want your business to succeed, you must have goals. They can be relatively modest (there's nothing wrong with that – many small businesses are great businesses). Alternatively, you might have far loftier ambitions (many people do). The important point is you need to know where you want to take your business.
Once you have clearly defined goals – which should be SMART (ie specific, measurable, appropriate, realistic and time-limited) – you can create a plan that explains how you will achieve them (ie your business development strategy).
It doesn't pay to make your plans too short term or too forward-looking. Most business plans for new businesses are based on one- to three-year projections. However, all good plans set out key goals – and explain how and when they will be achieved.
Because all businesses are different, goals and plans vary too. A business with greater resources might have higher ambitions or set out to achieve its goals quicker. External factors, such as market conditions, also have a bearing on business-development plans, so bear these in mind when considering your goals and strategy.
Planning should never be rushed or insufficiently informed, but rather the result of sound research and careful consideration. Bad planning can ultimately result in business failure. At the very least, your business might not grow as quickly as you want or in the way you hope.
Having a sound business plan shows awareness, vision, ambition and proper consideration of the facts.
Financial information is vital to all good business plans. And although no one can see into the future, forecasting (an essential element of any good business plan) provides a reliable means of anticipating what lies ahead. As events unfold, you can update your business plan and run your enterprise on a better-informed basis.
Business plans usually include a marketing plan, which explains how sales objectives will be achieved. Marketing plans also detail: target market and customers; demand; competitors' strengths and weaknesses; pricing strategy; marketing, sales and advertising methods; budget; and key dates.
Plans are unlikely to work if they exist only in a owner-manager's head. They need to be set out in black and white. Someone (probably you) must also assume responsibility for their implementation and communication, while progress must be reviewed regularly (another job for guess who?).
Revisiting your plan serves as a useful reminder of your goals. And when necessary, changes must be implemented, either to goals or strategy. A more drastic rethink will be required if progress falls way short of your expectations. Then it will be necessary to update your business plan.