If you’ve been operating your small business for a while without a business plan and you’re enjoying a nice profit, you might not think you need a business plan. But can you define what you’d like your business to look like in 5 years? Do you want things to remain as they are, or do you dream about expanding, or maybe exiting your business?
If you want anything other than the status quo for your business, then a well-written business plan can help you get there. It’s an important tool for several reasons:
It can help you get growth financing
Growing or expanding a business requires capital. If you need the bank’s help to get that capital, chances are your lending officer will want to see a business plan.
It helps you clarify your business goals
A business plan is a projection of where your company will be in 1-5 years. Writing one forces you to define what that looks like. Will you add a new location? Hire new staff? Introduce a new product or service? All of that can be outlined in your plan.
It’s a benchmarking tool
Your plan should paint a clear picture of your business’s current state, financially and strategically. It’s important to know where you are now before you embark on something new; otherwise, it’s much harder to measure your progress.
It helps you get out
Don’t you want to retire some day? Then your business plan needs to include an exit strategy. Whether it’s the sale of your business, a management buyout, or just a transfer of ownership to someone else in your family, putting this strategy in writing will help solidify it and make you more accountable to ensuring it actually happens.
Taking the time to write a business plan can be difficult. Some people say you don’t even need a business plan. But the fact is, you don’t really know what’s going to happen to your business in the future, but having a plan helps pave a much smoother road.
Jessica Oman and her team write business plans for small and large-cap entrepreneurs through her company, Write Ahead. If your business plan (or your business!) is broke, Jessica can fix it. She blogs about business writing on her blog, the Write News.