It is inspiring to know the success story of an entrepreneur or a company. You should understand that their achievement doesn’t build in one night.
For sure, there is a long journey to go through. Ups and downs, laugh and tear, deal and betrayed, and many more.
But have you ever wondered why they never lose their path to success? This is the reason why you must know the importance of the business plan. It is like the eyes to keep you in track among the disruption.
Even you have a small business; you still need a business plan because it doesn’t see the size of your business.
If you dream of expanding the market, increase sales, broaden the scoop, and other improvements, then you should make a business plan.
Someone who understands the importance of the business plan will automatically make it from the start.
Thus, they can create programs and activities based on the plan.
You may want to read: The components of a business plan.
- 1 What You Should Know About a Business Plan
- 2 The Importance of the Business Plan for Every Business Owner
- 3 How to Start Making a Business Plan
What You Should Know About a Business Plan
From the discussion above at least, you have a grand picture of the importance of the business plan.
But to get the essence, we will explain more here. Hopefully, it can clear your mind, and you achieve success.
Now you know a business plan acts as an eye for your business. That is true because inside a business plan is a roadmap.
It starts with defining the business vision and mission, objective, target market, until the budget detail.
The more detail the business plan is, the clearer the steps you should take. In the end, this brief has to be delivered to all management levels. Then, they will extract the outline to be more detail based on each unit tasks.
Besides the description of the business you run, you have to make a competitor analysis too.
It starts with getting data about market share to know the current market situation and who the players are.
Then, research them. See what they do, such as their promotion strategy, sales program, and the progress.
When you have a competitor analysis, you will have a balanced perspective from both sides, which are yours and the other companies.
Last but not least, the importance of the business plan also relates to its writing.
How good the program and how detailed your analysis is, it won’t be easy to understand if someone doesn’t write properly.
So, the next step after you know about the definition of a business plan, we also will let you know about its essence and how to make it. Read the further explanation below.
The Importance of the Business Plan for Every Business Owner
As we mentioned, before we tell you the steps to make a business plan, you should understand the importance of the business plan first.
It is essential, and every layer should understand based on their job-desk and level. Here, the reason why a business plan should exist in every company:
1. To Help Make Decision in Critical Situation
We know that along with the journey, your business will grow, and the purpose changes. You might feel lost and need something to back to the focus.
Here, the business plan will help you to get back in track. So, no matter how hard the situation is, your business plan determines the decision you should take.
Some companies change their business plan in the middle of the journey, and that is okay. But, remember, when you want to do this, make sure you sit with all parties and won’t disturb any sided which gives you profit.
2. To Minimize Big Mistakes
The importance of the business plan is because it acts as your guardian angel.
Every company ever made a mistake, but they are able to come back because they have a business plan.
It shows you how to make a better strategy based on the business objective and all things written.
As your information, these are things that usually make the business fails: lack of product knowledge among the team, wrong price strategy, miss the market competition, and lack of capital. Those are able to be solved by seeing back to the business plan.
3. To Set a Better Benchmark
Do you still remember when we talked about the competitor above?
It is necessary to set a benchmark because you can’t improve your business without having a benchmark because it helps to define your position in the market.
The market research gives you a deeper insight into what to do.
Also, it can inspire you about the existing marketing activities, advertising, until the new release and possibility product development.
4. To Help You Communicate with All People
All the people in the company must understand the importance of the business plan.
Once one unit or part is out of the company’s goal, they are hard to collaborate. Thus, a business plan should be made and spread to all levels.
Make sure your people get the main point of it. What the company wants to achieve, how to get there, the position among people’s minds, and many others.
If all people already know the main point, it is easy for you to direct them on the same journey.
5. To Secure Your Financial Condition
If you are lack of capital or planning to lend money from the bank, then you need to make a business plan.
The importance of the business plan here is to define how much money properly to lend, to which part that money is used, also the strategy to pay back that lend.
Getting money from the bank is okay if you have a clear plan to grow.
Because as a business running, it will give you profit and you can use the space for the bank.
Thus, a business plan is needed to pay off the debt.
6. To Reduce Risk
Every business has risks to overcome. If you have no good plan, then it is hard to face uncertainty condition in the future.
But if you have a business plan, the risks would be more manageable and won’t make your business collapse.
This is the importance of the business plan because inside the brief, there are a projection and things that reduce the risk.
Having a business plan allows you to leave any problem, lift up the business, and a clear view of the future.
How to Start Making a Business Plan
Finally, after knowing the importance of the business plan, this time is to see how to make a business plan.
You shouldn’t be a master of economic, but digging deeper into the core of the business is enough. After that, follow the points below:
1. Extract the Objective and Target Market
If you understand the business, we believe that you already know how to describe it well.
Write all about the business focus into the objective part, then tell who your target is.
The more detail you describe the goal and target, the easier people in the company help to achieve what you want.
2. Do a Market Analysis
One of the importance of the business plan is knowing your rival. So, doing market research is part of making a business plan.
It will reveal the demand for your business in your target market.
If one day, the business focus should change, then make a new plan to adjust to the condition.
3. Do a Competitive Analysis
Some people put this analysis one with the market analysis. But it is better to separate so that you can be more focused in detail.
Examine the competitor’s strengths and weaknesses.
If they already dominated the market, then you can see what they have done.
Once you get the main key to their strategy, you can run fast and be equal with them.
4. Create a Management Plan
As we said that the importance of the business plan, it has to be understood by all people.
Thus, the business plan should be written specifically about people management.
It could be started by defining organization structure, the position name, how many people needed there, until the career path for every employee.
The business plan can also be a highlight guide in recruiting someone.
You may want to read: The Guide on How to write a business plan
5. Define the Operation Plan
The importance of the business plan is also related to operational activity.
When you are making a business plan, you should list the equipment needed, facilities, inventory, until supply requirement.
Don’t forget to write the list of the necessary manual too.
No matter your company produces goods which sell to the customer or providing service, the operation plan has to be made for your daily activity.
6. Determine the Financial Plan
This part is important too because, as one of the success factors in every business.
No matter your business is a start-up or the mature one, the financial plan shows how the business manages its income, debt, and even the ancillary revenue.
Because the business plan includes a financial plan, then you are able to forecast your performance too for a certain period.
Some people see their business plan is a vital document. They think it is a “holy” brief.
Thus, the importance of the business plan should be understood by everybody.
Whether you are the director, manager, leader, or the technical person in the field, all people take part in the success of the business.