I liked Why You Need a Business Plan, a nice piece by Colleen DeBaise in yesterday’s Wall Street Journal. She has a lot more detail than I’m showing here for each item, based on a very useful five-point list:
- It forces you to identify your (and your company’s) strengths and weaknesses.
- It helps you figure out how much money you’ll need.
- It gives you clear direction, which can help eliminate stress.
- It will serve as a resume when you seek lenders, investors or partners.
- It makes you evaluate the market for your product or service and size up the competition.
I particularly noticed point three there, in the middle of the list, with its note about clear direction and helping to eliminate stress. Colleen explains:
As a business owner, you often have to juggle multiple roles–everything from bookkeeper to CEO–and that can leave you feeling distracted, disorganized and overwhelmed. A document that outlines your mission and plans for the future can prevent overload, help you set realistic goals, keep you on track and boost your productivity.
I’d also add a sense of the step-by-step process, breaking things down into more manageable pieces. And having numbers to use in tracking progress.
I noticed that four of those points (No. 4 excepted) apply equally to new businesses and existing businesses, and whether or not you’re looking for business loans or investment.
And also that only point No. 4 requires a fully formed, edited and polished business plan printed out and made available to outsiders. For the rest of those benefits, you can work with a plan-as-you-go business plan that lives on the computer.
And in all cases, the benefit comes from living with the plan, keeping it up to date, revising as actualities and assumptions change, and using it to manage your company.
(Photo credit: Gabi Moisa/Shutterstock)