There are many important reasons for drawing up a business plan. Some of the most significant are the following:
* Getting an integrated view of your business
By preparing your business plan, you get an integrated view of all issues regarding your business. For example, it helps you to identify better your target clients, outline your market segment, shape your pricing strategy and define the competitive conditions under which you must operate in order to succeed. Business planning ensures that all these considerations are consistent and properly harmonized. Also, the business plan process often leads to the discovery of competitive advantage or new opportunities as well as deficiencies in the plan. Committing your plans to the paper ensures that your overall ability to manage the business will improve. You will be able to concentrate your efforts on any deviations from the plan before conditions become critical. You will also have time to look ahead and avoid problems before they arise.
* Mutual understanding within the management team
Reaching mutual understanding among the members of the management of the firm is particularly important in cases in which the recommended policy of engaging as many managers as practically possible is applied in the preparation of the business plan.
* Determining financial needs and applying for funds
Determining financial needs and applying for funds. Determining the amount, type and sources of financing and when it is required. Using the business plan in the process of applying for funds.
* Approval from the board of directors/shareholders
Using it as a basis for getting approvals from the company board and shareholders.
* Recruiting
Using it in recruiting and introducing new members of the management and staff.
* Deriving objectives for employees
Deriving from the business plan measures and objectives for units and individuals in the organization (management by objective).
* Informing employees
Using it as a means of informing/motivating employees about the objectives of the company.
* Informing lenders
Giving it to banks/investment funds that have financed your business in the past and require periodical information for monitoring purposes.
* Informing partners
Using the business plan in informing business partners and other relevant organizations. In preparing this manual, it has been assumed that the primary objective of preparing a business plan is to determine the financing requirements of your business and to apply for external funding.
Source: UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
ARTICLE CONTRIBUTED BY:
BPlan Experts (www.bplanexperts.com)
BPlan Experts is one of the world’s top business planning and startup consulting firms. With over 1800 clients located across 80 countries, BPlan Experts is an authority in startups and entrepreneurship. BPlan Experts specializes in providing end to end support to entrepreneurs and startups to include ideation, feasibility. business planning, funding assistance, implementation support, and scaling up of operations.