Why Plan?

Business plan strategy

The strategic value of a business plan is derived from the information you collect and the knowledge you acquire during this process. That is, the exercise of preparing a business plan is critical in helping you gain an understanding of how your business venture will operate in the marketplace.

Financial lenders and other potential investors and advisors will use your business plan as a tool to assess their level of support for your enterprise. As such, it is important to ensure your plan is as complete, reliable and timely as possible.

You should do a business plan for a number of important reasons. Some of those reasons include:

Your own thinking process is solidified through the planning process. The planning outline leads you through a series of questions and issues that you may have forgotten about when you were just thinking about your business. Remember that you are an investor in your own business. You are the first person who must be convinced of the validity of your business concept.
Your bank will need to be convinced of the viability of your business, or your business expansion. The business plan is a communications tool. Inform and influence the reader towards some action – providing a loan, extending credit or investing in your business.
Your business plan provides some guideposts in running your business. You will set goals and then, once you are in business, you can measure those goals against the actual performance. Goals should be specific, measurable, achievable, realistic and time limited –
SMART.

Your business plan has three elements.

It prepares you – the entrepreneur for starting the business.
It explains your business and proves the viability of the business to outside parties.
It spells out your business goals in clear SMART terms.