Most business owners know they should have a business plan. Yet writing one still is a practice that often gets put off and pushed by the wayside. Managers think, “I’m too busy,” or “I don’t really need a plan,” or even, “The market changes too quickly. How can I possibly plan?”
But business plans are essential. Not only do they help a company obtain financing, they are a successful businesses’ very keystone. When a business plan is carefully considered, crafted and communicated throughout the organization, it becomes a living document that helps managers and employees stay focused and profitable every day.
Business plans are not uniform across industries, nor are they always called by the same name. They can be used to convince banks to expand credit or secure financing, woo potential investors, attract new employees or weigh important business decisions against.
“[A business plan] is a written document that describes how the chief executive officer and management team plan to successfully exploit an opportunity,” says Dr. Joe Rousseau, J.D., chair of entrepreneurship and associate professor at Northwood University. “Already existing businesses usually call their total business plan for the next fiscal year ‘The Budget.’ If they plan to launch a new product or business expansion they might call the business plan supporting this opportunity a ‘Business Case.’ Entrepreneurs creating new ventures typically call their plans, the ‘Business Plan.'”
Regardless of name, a dependable plan should have some form or variation of the following components, according to the Small Business Administration (for more details, see sidebar: “All the Key Parts”):
If your company has been operating for years without a business plan, it’s not too late to make one. The business planning process is one of careful examination and assessment. It should be a rigorous, introspective process for the business’ management team. Yet a mistake business owners make routinely is not actively involving their staff when making or revisiting the plan.
“I like to get a lot of input from the management team when making a business plan,” says Dr. Albert Bates, chairman and president of the Profit Planning Group, a firm that works exclusively in corporate financial planning. “They’re the ones who are going to have to implement the plan once it’s made. If they don’t feel like they played a role in it, it is something we’re arbitrarily dropping on top of them. It becomes really dysfunctional.”
