Why is Business Planning Important?A 3 minute read
We’ve all wondered if a business plan actually makes sense.
I didn’t do a thorough business plan for my first serious startup and it flopped, in ways I was not expecting it to. My justification for not taking the time to do it, was that it was all in my head and we didn’t need it because we were all aware of the financial milestones ahead, but I did not take into consideration that my two business partners weren’t psychic (neither were the employees) and probably needed validation that the idea would really work. Six months and six clients later, the partnership broke up, and the remaining two founders had no plan to keep us grounded and focused in the chaos and stress. So, we spiralled out of control until we hit ground bottom. And then we did a business plan.
But, how important is business planning?
A business plan keeps you focused and grounded
When the monkeys are running around like headless chickens and the storm is raging, you’re going to be grateful for that business plan. Many times, a business will start at point A, and the right path should be A through B through C, et cetera, but what tends to happen is A, F, X, W, H… ERJUIP… NQYBZ…. A business plan helps you to expand your business in a healthy manner, and keeps you on the right track, so you won’t have a host of disjointed items and a confused consumer market. It’s a good place to refer to when you’re stuck, or disenchanted.
A business plan holds you accountable with milestones
Milestones are key to businesses; they keep us accountable with a date. They also tell you from a glance where your business should be in year or two from now. As a business owner, or even an employee, you can think of milestones as personal KPIs that you’re trying to reach, so every little bit contributed to the overall effort helps. Milestones also indicate to employees that you have a vision and a plan; you’re going places! And if you miss a milestone, you can rally your team together to try to make that milestone happen.
A business plan helps you in a ugly times
Any business plan should highlight the major threats which exist to put you out of business, or to cause you to fail. Once your risks have been properly assessed, you should have some step by step guides to tell you how to deal with your situation. This should (or may not) keep you from panicking and making the wrong decision. So many startups fall at the point where they hit a snag, because there is no planning in place that looked at where they could go wrong; in fact, most startups don’t have a business plan due to a lack of knowledge, a lack of funding to pay for one, or a combination of the two.
Can anyone write a business plan?
Can anyone perform open-heart surgery? No. So why do we so often try to do specialized tasks ourselves and become disenchanted by the result? Business plans should be written by someone who can map your business out properly, while looking at all of the possible instances or roads your business can take over a defined period. It’s also unbiased and removed from your emotional attachment to your business idea. If a business plan is the blueprint to a business, I wouldn’t want just anyone writing mine.
A business plan should also provide some level of validation and comfort that your business is in fact possible, and should give you enough courage to push through regardless of the circumstances.
So, if you have a business idea, it’s time to validate it with a proper business plan.