The benefits of business planning
“To plan or not to plan,” is a question that many startups ask. The answer should almost always be a resounding “yes” – a business plan is an important strategic document that answers where you are, where you want to be and provides the direction on how to get there.
Many entrepreneurs remain unconvinced that the time and effort spent on research, projections and planning is really the best use of their time.
Statistical research appears to muddy the waters further. A study by Babson College of 116 new ventures concluded that the inclusion of a formal business plan made no difference to overall business performance where outside funding was not required . Similarly, advocates of the “learning by doing” school of thought believe that formal planning can stifle the startup process. The so called “lean startup” methodology advocates experimentation, customer feedback and iterative design .
However, recent research published in the Harvard Business Review demonstrated that entrepreneurs who write formal business plans are 16% more likely to achieve viability than the otherwise identical non-planning entrepreneurs . Another study from 2017 suggests that whilst having a documented business plan is not a guarantee of success in itself, it does indicate that the type of entrepreneur who completes a plan is more likely to run a successful business .
With so much at stake in a new business, it makes business sense to make use of all resources at your disposal and to create a documented business strategy. Below, the Think Beyond strategists outline 3 key benefits of business planning and answer why it really does pay to plan – both now and in the future.
If you’d like to discuss your business growth with one of the Think Beyond consultants, call 01625 682110 for a no obligation chat.
3 reasons a business plan is vital to your success
A business plan should be seen as a necessary business component that feeds into your long-term success. Three key ways a business plan does this is by…
1. Providing the grounds for funding
Unless you are self-funding, a business plan is simply essential to secure financial backing. Whether you plan to approach a financial institution, pitch your business to angel investors and partners or apply for government funding, a business plan is often the only acceptable way to convince investors of your business viability.
Similarly, a formal business plan fosters legitimacy and can help to reassure not only investors but staff and suppliers that your business is a credible venture.
2. Focussing your efforts
Without a documented plan in place, precious time, and indeed money, can be lost to poorly or incomplete thought out decisions.
The action of formally writing your business plan forces you to acknowledge and put into print the why behind your business decisions. Factors such as product/service offering and staffing requirements should be decided as the result of research and any gaps identified can be bolstered during business planning.
3. Generating action points
A business plan is far from a static document that exists in isolation. Rather, it is a flexible, living piece that evolves with you and your business and weaves into other areas such as your marketing plan. Business planning should be seen as a process; a researched base that generates action points and guides your overall business direction.
How a consultant can help document your business strategy
From immediate benefits such as securing funding to providing long-term strategic insights, a well-constructed plan is a must for many businesses.
Yes, you could choose to “go it alone” and create a business without a documented strategy in place but you risk missing out on the benefits that a clear business plan can bring. For most, this risk is simply too great.
Think Beyond is a marketing management consultancy that can help you and your team get to grips with your business plan. Fast. Our qualified marketeers partner with senior management teams on all aspects of business research, planning and strategy right through to providing board-level Marketing Director as a Service (MDaaS). Our aim is simple: to provide business solutions that drive your revenue into positive cashflow.
Find out how we have already helped businesses like yours take control of their strategy by viewing our testimonials and case studies here.