A Business Plan is a document with your business goals - the roadmap and activities to achieve them.
According to this definition, having a plan that shows how your business will work and how it will succeed should be the first thing to be done by entrepreneurs (and also updated from time to time). However, in reality it often happens differently, especially for small enterprises. Many are founded and operated on a daily basis without a business plan. In fact, at the Incubators, Bootcamps and Workshops I’ve been teaching in the past years it was common to hear from small business owners that they didn't even know of the existence of this written plan. The causes are diverse and it’s important to change this reality but I won’t explore them in this post. In my informal conversations with business founders and partners, I was surprised to hear that some think this could be a dispensable document considering they haven't failed their enterprises without it. To add more to this conversation, let’s have a quick look at what studies published in the United States in the past years have shown:
Roughly 80% of new businesses survive past their first year of operation but half of them no longer exist after five years. Only one-third make it past their tenth anniversary.
80 percent of small business owners who apply for a bank loan get rejected, roughly 8,000 business loan requests are declined every day in the US.
The average small business owner has to approach multiple banks and spend about three to four full days filling out applications before they can find a bank willing to lend to them. When they do lend.
I’m not suggesting that having a business plan will eliminate the chances of having these challenges, but in my experience 100% of those that had the chance to build a structured plan felt much more empowered, able and prepared to make decisions and to navigate uncertain waters.
The following 13 reasons why you should have a Business Plan summarizes the importance of having a clear understanding of your value proposition, products/services provided, clientele and competitors, sales, finance, operations, HR and marketing.
I bet entrepreneurs will resonate with one or more of these reasons.
In order to create a new business.
To grow your existing business.
To apply for a loan.
To seek investments.
To gather information for transactions such as divorce, inheritance, estate planning and tax issues.
To sell your business.
To develop and attract new alliances and/or partnerships.
To recruit / attract talent.
To get employees and contractors on the same page in terms of business goals.
To improve decision making and define priorities.
To share your strategy and action plan with your spouse and partner
To set specific objectives for managers.
To understand and better plan the intersection between your business and your personal life goals.
Finally let’s not forget that (i) 33% of small business owners reported working more than 50 hours per week and 25% said they work more than 60 hours a week (they work twice as much as regular employees!) and (ii) a business plan can be completed using the app made by Centro Community Partners for example in less than 4 hours or attending programs that vary from a few days to a few months depending of the depth of the content.
Don't work harder, work smarter - and clearer!
Considering all that you can gain and the amount of time in your life that you invest in your business, I don’t see any reasons why you shouldn't create a business plan. Tell me I’m wrong.
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