WHY A BUSINESS PLAN?

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 a competitive advantage or new opportunities as well as deficiencies in the plan. Committing your plans to 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:

Your business plan will help you determine the amount, type and sources of financing and when it is required. Using the business plan in the process of application for funds.

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.

These are just few reasons why you need to develop your business plan for your business. More tips in subsequent emails.

Credit: Utibe Etim