The Function of Business Planning
When new entrepreneurs look for advice as they are starting out, one of the things they are sometimes told is to write a business plan. A business plan outlines your business functions, lists your key personnel, gives preliminary budget needs, describes your sales and marketing approach and projects revenue. Understanding the function of a business plan will help explain why you should put forth the effort and resources necessary to create one.
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Attracting Personnel
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Business planning condenses your entire company down in to one convenient document. At some point, you will find yourself needing to convince talented executive candidates to come work for your growing company. Rather than trying to explain your future plans in a single meeting, you can send your candidates your business plan to establish a framework of conversation. The executive candidates get a detailed understanding of your business, and you can focus your efforts on finding ways to entice them to work for you.
Investment
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Every investor, from your friends and family to the large commercial banks, will have many questions they want answered before they will finance your business. A business plan, whether it is the overall business plan or a plan for a particular project, outlines everything an investor would need to know to feel comfortable with your company. The business plan eliminates the need for hours of preliminary conversations about your company and your plans and can allow you to get to negotiating financing terms.
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Blueprint
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The business plan is the blueprint you will follow to grow and expand your business. You create your business plan based on your initial vision for the company. As that vision changes, so will you change your business plan. A business plan allows you to stay on track with your vision and avoid spending money and resources in areas with which your company is not concerned. It is also something you can give to the other managers and executives in the company so that you can all be unified in your goals for the organization.
Progress
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When you put your plans and financial projections in a business plan, you also create ways of measuring progress. You develop milestones and then set goals for those milestones. For example, one of your financial goals may be to reach $1 million per month in sales. Along the way, you set up quarterly goals to mark your progress. As long as you are attaining your milestone goals, you know you are on track to grow the company as planned. Falling off your projected progress means a re-evaluation of your methods and an update to the business plan.
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References
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- Photo Credit Writing of business plan image by Vasyl Dudenko from Fotolia.com
