Small Business Enterprise - SBDC October 2021

10 reasons a business plan benefi ts your next venture

The difference between failing, surviving and thriving

While business plans often seem overwhelming and intimidating, they help create a clear strategy and vision. A business plan does not need to be a 200-page document, it simply needs to give potential partners, supporters and investors an understanding of your business model and financials. Additionally, a business plan helps entrepreneurs set realistic goals, track progress towards those goals and make changes to the plan as they learn more about their market and its current demand.

The advantages of creating a business plan are evident but here is a list of 10 reasons why a business plan is essential and could significantly benefit your next business venture.

1. It showcases that you are serious about your business. As previously mentioned, a formal plan will show all interested parties -- employees, investors, partners and even yourself -- that you are committed to building and growing the business. A business plan forces one to think and plan through growth strategies that will propel you to achieve your goals.

2. It allows you to establish business milestones. A well-written business plan will clearly lay out both short- and long-term milestones that are important to the success of your business. Once these milestones are established, creating a plan to reach them is easier.

3. It allows you to understand your customers. A business plan provides an in-depth customer analysis that is essential to your business. Understanding your customers will not only allow you to create and deliver better products and services, but it also allows you to do it in the most cost-effective way.

4. It allows you to understand your competition. Other than understanding your customers, a plan requires you to analyze your competition. It is critical to understand your company’s competitive advantages and disadvantages. Both direct and indirect competition should be considered when trying to understand your market.

5. To determine your financial needs. A plan will help you determine exactly how much capital is needed, and what you will use it for. This can be used to plan ahead and be prepared in the early months of your business.

6. To plot your course and focus your efforts. A business plan provides a roadmap to those business milestones we discussed earlier. Without a business plan, you may shift your short-term strategies, which will ultimately affect your long-term achievements. By following the business guideline that has been set, you are more likely to reach success.

7. To position your brand. Positioning your brand allows you to define your company’s role in your particular market. This definition provides a clear picture to your customers, investors and partners.

8. To document your marketing plan. A well-documented marketing plan is essential to the growth of a business. It raises several important questions such as “how are you going to reach your customers?” or “how will you retain them?” These marketing strategies evolve over time, so revisiting your marketing plan at least annually is critical.

9. To reposition your business to deal with changing conditions. During diffi cult economic conditions, like operating during COVID, if current sales or operational models are not working, you can rewrite or adjust your business plan to define and validate new ideas or strategies.

10. To uncover new opportunities. Through the process of brainstorming and planning, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business. It’s coming up with these ideas and executing them that is often the difference between a business that fails or just survives and one that thrives.

Shelby Flores is a business consultant for the Illinois SBDC at the Rockford Chamber of Commerce focusing on the SBDC’s Hispanic entrepreneurs.