Create a Business Plan

A business plan is like a roadmap: it helps you set, track and reach business milestones. The process of writing your plan is what’s important because it forces you to think through every aspect of your business. And planning is not just for startups. Mature businesses also benefit greatly from revisiting their business plan.

Your business plan should first outline your company’s short- and long-term goals. Then you must identify the specific steps necessary to reach those goals. This ensures that you measure your progress and make necessary adjustments along the way to stay on track.

A complete plan also includes financial statements such as a cash flow statement, a balance sheet and an income statement (P&L). If you can’t quantify your plans, then they’re just wish statements.

Here are some things a complete business plan can help you achieve:

1. Grow and perform

Multiple studies show that companies that plan and compare their plan to their results on a regular basis grow faster. Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans.

Your business plan will also help you define budgets and revenue goals. If you’re not meeting those goals, you can adjust spending plans to create more realistic budgets.

2. Avoid Mistakes

To turn your business idea into reality, you need to honestly assess the feasibility of your ideas. A business plan forces you to take a step back, look at your business objectively and identify risks and opportunities early on.

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. By detailing how you plan to make and spend money, you can effectively assess the viability and scalability of your business.

• If there is a market for your product or service?
• Who is target audience?
• How you will gain an edge over the current competition?
• Can your business run profitably?

The most valuable business plan might be the one that persuades you to try a different approach altogether.

3. Attract investors and creditors

One of the top reasons to have a business plan is to make it easier to raise capital.

A business plan can help you determine how much money you need to raise in the first place. And then investors, partners, and creditors want to know that you have a solid plan in place including how you will spend the money once you raise it and the long-term potential of the investment.

Would you loan someone money without knowing what it’s for or when you might get it back?

4. Keep everyone on the same page

A business plan starts with a mission statement, which defines the purpose of your business. It also includes a personnel plan, which outlines the roles and responsibilities of current and future employees.

This is why a business plan can be a great tool for keeping your team in sync and focused on tasks that move the needle.

5. Make big spending decisions at the right time

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase. These are always major decisions that carry major risk, but developing your forecasting skills will help you make these choices with confidence.

6. Position your brand against the competition

Competitive research is an essential part of writing a business plan. It encourages you to ask questions like:

• What is your competition doing well? What are they doing poorly?
• What can you do to set yourself apart?
• What can you learn from them?
• How can you make your business stand out?
• How can you identify your target market?

7. Align your marketing strategy to your goals

A business can’t grow without customers, and you’ll need a strategy for attracting and retaining them. Your business plan should include information about your target market, how your sales funnel will work, and your marketing budget.

8. Attract potential buyers

Down the road, you might decide that you want to position yourself for acquisition. Having a well-researched business plan is going to help make the case for a higher valuation.