Having a business plan prepares your organization for success. Without one, attempts to achieve your goals may be fruitless.

New Year’s brings resolutions.  Resolutions are goals.  One of the most popular New Year’s resolutions made is to exercise more.  People have good intentions.  They want to get fit and be healthy, but do you know how many of those resolutions are kept?  According to a Ipsos survey, only 8% of Americans who make a New Year’s resolution keep them all year and 80% have failed by the start of February.  I would argue that one of the key components to the failure of keeping resolutions is that a grand announcement is not enough to set you on a path of success.  You need a plan and accountability to make the resolution a reality.

The same is true with starting or growing a business.  Intentions do not get the job done.  There needs to be a map to success.  The statistics do not lie.  A business plan cannot guarantee that everything will work out seamlessly, but a business plan can help businesses grow 30% faster.  Some studies have shown that companies that had 92% growth in sales from one year to the next, typically have plans.  In fact, 71% of fast-growing companies have business plans.  In the end, a business plan offers a road map to achieving a goal or growth.  Without a plan, a business merely has a dream or wish.

A business plan is a living and breathing document.  It should change over time.  As times and markets change, so should business plans.  Entrepreneurs should regularly review their business plan to determine if current performance is indicating that the trajectory for growth and success is aligned.  In essence, by reviewing the business plan continuously, you are holding the business accountable.  The business plan should outline key outcomes or key performance indicators.  The business can habitually check in to see if KPIs are met.  If not, the business can make alterations to benefit the outcome.  Without a business plan, there is no accountability; no KPIs to be evaluated along the way.

For example, a small business may set a goal to increase revenue by 50% year-over-year.  That is an ambitious goal.  How do you evaluate throughout the year that the goal will be met?  What KPIs should be established?  To limit the amount of “gamble” to meet revenue goal, annual, quarterly, monthly, weekly, and daily KPIs need to be established.  You may know you need to acquire 50 new clients to reach your revenue goal for the year, but how do you map out the success, so it becomes tangible?  Your KPIs need to be broken down even further.  How many phone calls, emails, meetings, and quotes will need to be sent out every single to day to make goal?

Ultimately, the business plan takes the “big idea” or goal and breaks it down into directions. 

The business plan helps you:

• Allocate resources
• Assess options for growth
• Assess performance
• Define your business’s purpose
• Define marketing aims and objectives
• Define operations
• Define financial information
• Explain business objectives and goals
• Establish an exit plan, if needed

With all the key elements outline above, the business plan helps the business owners make better decisions.  Owners continually make tough decisions and practice crisis management.  When critical issues and crises emerge, business owners typically do not have the luxury to sit down and evaluate all the outcomes.  Building the business plan allows the business owner to answer some of the critical business decisions before a crisis emerges.  A crisis can easily squash any hope for growth.  In fact, as we have seen in 2020 and the Covid-19 pandemic, crisis can permanently close a business.  A business plan serves as a tool to provide better decision making during a crisis.

Furthermore, a business plan allows a business owner to make some mistakes on paper.  Many of the reasons that business fail is due to lack of planning.  Many businesses fail due to not answering a market need, lack of capital, inadequate team, stiff competition, and pricing.  All these elements are thought out and planned within the business plan.  Done right, a business plan not only helps a business’s viability, but its growth trajectory.

Growing businesses are businesses run by those not satisfied by the status quo, and they are run by individuals who are not reactionary but predictive.  A growth mindset requires creative strategic thinking.  A business plan encourages continually seeking out emerging markets for the company’s products and services. It also encourages finding new products or services that the business could offer to the marketplace.  By completing a market plan within the business plan, a growth strategy emerges forcing ideas to become tangible and real.

Up until this point of the blog, I have listed a variety of reasons as to why it is imperative to have a business plan to grow a business.  However, there is another reason:  If at any point you want to expand the business, you will need a business plan to seek out funding from a bank or investor.  An updated business plan is imperative for forecasting or raising capital for expansion. 

By applying this knowledge to the “exercise more” New Year’s resolution, what would make the resolution become more probable for success?  A person should dive into the “why”.  Does the person who wants to exercise more want to look and feel healthier?  How much would they like to ideally weigh?  Would they like to be able to run a marathon?  What is the ultimate goal?  What constitutes as exercise?  How much exercise would they like to do daily/weekly?  Why?  As you can see, without laying out a roadmap or plan for success, the ability to “exercise more” becomes less probable.

In essence, a business plan clearly articulates and breaks down your goal or vision for the company.  To quote Simon Sinek, “If you can clearly articulate the dream or the goal, start.”

If you have questions on how to craft a business plan, MPWRSource offers a Business Planning Bootcamp which utilizes the CORE FOUR Business Planning Course to teach aspiring or existing business owners the information and skills in business planning. Reach out to the MPWRSource Squad for more info today!