Business Plan: What Is It and Why You Need It * Incedo Group

Business Plan: What Is It and Why You Need It

A business plan is defined as a formal statement of a set of business goals, reasons why they are believed to be attainable, and how you plan on reaching those goals. It can also contain background information about the organization or team attempting to reach those goals.

There are two types of business plans. One type you would prepare for a lender if you are starting a business or need cash for expansion or growth. The other type is what I refer to as an operational business plan. It is created to define goals for your business or department for the next fiscal year (or two), and provide a path to achieve those goals.

A business plan you prepare for a lender includes an operational plan and a lot of additional information that a lender uses to determine you’re eligibility for a loan. What we are going to be discussing in this article is the operational business plan. It is used to plan your goals on an annual basis in order to track your progress and make course adjustments.

For many the idea of creating a business plan has them breaking into a sweat, shaking their heads in despair, and putting it off altogether. I had one client tell me he doesn’t develop a plan or goals because he finds he never meets them when he plans, and it stresses him out.

I understand the fear, not knowing how, worried about accountability, and more. There are plenty of good reasons though to plan.

What are the benefits of business planning?

There are a number of benefits of business planning, including the following:

1. Planning Provides a roadmap: Planning provides you a road map of where you are going and an outline of how you are going to get there. If you were planning a road trip you wouldn’t simply jump in the car and hope you could figure out a way to get to your destination. You’d look at a map, determine which highways to take, where you might stop to sightsee or hotels where you would spend the night. A business plan does the same, it provides the roadmap, how tos, by whens and more.
2. Identify Problems: Planning helps you identify any problems before implementing plans. You might discover that you don’t have enough of the right people to get the results you want. Or a new software implementation will delay other projects and you can adjust in advance. You’ll see problems that might occur and make changes before implementing the plan.
3. Get buy-in from others. When others on your team get to participate in the planning process, it’s easier to get their buy-in. That’s not to suggest you need to include the team in the planning process from start to finish. However getting their ideas on goals, projects, resources, and timelines is helpful in getting commitment when it’s time to implement the plan.
4. The Roadmap provides a way to measure results. Having a plan allows you to measure progress and results. Knowing this gives you information so you can assess what’s off, and make adjustments if appropriate.
5. Minimizes the risk of failure: Planning helps you be realistic about your goals based on factors such as resources, timing, other goals, and more. It should include a section on ‘what ifs’. What if a key person leaves or the software implementation takes longer than
planned or….
6. Update based on situations: I’m not suggesting that you adjust your plans if you aren’t achieving your goals. However, there are situations you could never have predicted or considered (pandemics, weather conditions that impact your operations, or other catastrophes. Plans should set you up for success. But when situations radically change, the plan may need to change.
7. It’s not just about the document. People think planning is about creating a document, and it is, but it’s much more. Part of the value in planning is the time you take to think, strategize and assess. Leaders don’t often take the time to simply think and not be doing. The document is the written outline of the time you took to think That time is well spent.
8. Success is exhilarating. It’s exciting to have success and share this success with others. It’s infectious.
9. Provides a starting point for future years. Before you start next year’s plan, you’ll go back to this year and evaluate and assess. What goals did you achieve or not? Which needs to be carried over to the next year etc.? You’ll have a starting point for this year’s plan.
10. Gives you a ton of information. If you consistently pull out your plan and evaluate progress, and make course adjustments you’ll gain a wealth of information. If you take the time at the end of the year to really evaluate the plan, what worked and didn’t, what do you need to do differently, what happened…and more. There is so much information you can glean from assessing and evaluating your plan throughout the year and at year-end.

If you’ve never done a business plan before it’s okay. Start small. List the areas of your company or department for which you might want to create goals. Consider areas such as people, processes, projects, revenues, etc. If you have done a business plan in the past but wonder if you should still bother, I promise you the answer is yes.

A final note. Don’t rush through this process. Remember a key value in planning is the time you give yourself to think.

Not sure where to start a business plan? Or maybe you’ve done them in the past but it simply felt like a chore, rather than a path to achieve your dreams. I can help.