Too many people who start small or home based businesses think that business plans are something that only people seeking finance, or big businesses need. The truth is, however, that the small business plan is one of the most important planning tools you have, and we are about to tell you why.
When you are a small business owner, chances are you spend most of your time reacting to events and circumstances. You probably spend more time working IN your business than you do working ON your business. Writing your small business plan, or updating it, even if you do not plan to apply for business funding, is a great way to force yourself to think about where your business is, and where it is going.
Another reason why a small business plan is critical is that it is the business equivalent of the old saying: those to fail to plan, plan to fail. Having something written down, even if you eventually deviate from it, forces you to plan ahead for your business, and it is always better to have a ‘road map’ to remind you of the direction you want to be going in.
Your Small Business Plan and Funding
Many people these days start home businesses or micro enterprises with no capital at all. Some of the world’s most successful companies have been bootstrapped into existence, and it is entirely possible that yours could be too.
However, if you do need funding to get your company from idea to reality, then there is no question that you are going to need a small business plan.
Every type of investor out there, from traditional banks and lenders to business angels, will want to see your business plan before they consider funding your idea. There are several reasons for this.
Firstly, the mere fact that you were committed enough to sit down and write a small business plan, research everything you needed to complete it, and make it as professional as possible tells investors you are serious. Reading your small business plan will give seasoned investors a good idea of your chances of success, and they will also be able to gauge your understanding of business from your plan.
In a nutshell, your business plan will open doors with funders, and if they like what they see, it could be the very thing that gets you the capital you need.
Should You Pay For a Small Business Plan?
If you need a business plan in a hurry, to approach a bank or lender, it can be tempting to pay a professional or company to create the entire plan for you. However, while that is certainly the easiest way to get a small business plan, it might not always be the best idea.
The truth is, writing a small business plan is a crucial part of your business development process. It is a process that forces you to think about where you are today, and where you would like to go with your company. If you leave it up to someone else to do, you lose the learning experience that writing a small business plan offers you.
A better idea would either be to use a business plan template, business-planning software, or to collaborate with a professional on the small business plan you have in mind. That way, you get all the benefit of doing the research and groundwork for your plan, but with a little help to make sure that your small business plan is exactly what you need.
Not only is this a cheaper option than hiring someone to complete your entire plan, but you’ll learn a lot about your business, and how to get from where you are now, to where you want to be.
How Often Should You Change Your Small Business Plan?
So you thought you only ever had to write one business plan. That you would write your plan before your business launched, and that that would be the end of that. The bad news is that you could not be more wrong.
Writing a business plan before you start your business, especially if you want to apply for financing or investment is one of the most important times, you will have to write a small business plan, but there are plenty of other times you will need to revisit your plan. Those times include:
- If you are adding a new product or service to your business.
- If your core team changes, or if you take on a new partner.
- If you open a new, branch or store.
- If you receive financing later on in your company life cycle.
- If you want to apply for later stage financing for your business.
There are plenty of other instances when you will need to rewrite or revise your business plan too – in fact, every time there is a major change in your company, you should probably consider it. So if you have not already learned to write a killer small business plan, or invested in tools to let you do just that, then it is probably a good idea to start thinking about it!