Importance of Developing Your Business Plan

Most business owners know that they need a business plan, yet they find it hard to justify setting aside the time necessary to write one.  When I owned my restaurant, I was so busy running the day-to-day operations, that I rarely thought about my plan. Fortunately, I had taken the time to write one before we opened the restaurant, and as a franchise restaurant, much of the strategic decision-making was made by the corporate office. 

It is an important exercise, and one which all business owners should prioritize.  There are two main reasons that people write a plan: (1) to use it as an internal document that guides decision making, or (2) as a requirement for a loan, a lease, or another investment source. The good news is that if your business plan will be an internal guide, then it doesn’t need to be a formal document written in complete, well thought-out sentences.  Rather it might consist of lists, bullet points, and worksheets.  That is not the case if you will be sharing it with others for the purpose of obtaining a loan, attracting investors, or applying for a lease.  In these situations, you do need to produce a well-written document that shares your vision, keys to success, earning potential and other vital information.   

If you are not trying to gain access to capital or convince a landlord to lease space to you, you may wonder why you need a business plan.  Going through the business planning process will help you to: 

  • Focus on all aspects of your business and answer questions about your business that you might not have thought of before 
  • Evaluate the potential profitability of your planned operations 
  • Determine the amount of investment required to start and sustain your business 
  • Develop operation processes 
  • Define products and services to be offered initially and identify potential future offerings as the business grows 
  • Identify your target market and create customer personas 
  • Establish customer service policies, including pricing strategies 
  • Create employee policies 
  • Analyze the competition 
  • Develop contingency plans 
  • Think through your exit strategy 

Tips for Writing a Great Business Plan 

  • Tell your story 
  • Answers the questions: 
  • Why are you in business? 
  • Who are your target customers? 
  • What problems do you solve for your customers? 
  • Instill confidence in the reader that you can accomplish your business goals 
  • Use good grammar and complete sentences 
  • Be clear and concise. Think short story, not novel 
  • Explain industry terms and acronyms but don’t explain common business terms 
  • Limit charts and graphs 
  • Share your passion! 

You should develop your plan before you start your business and review it at least annually.  As you review your plan, you want to ask yourself: 

  • Am I following my business plan? 
  • Is the company ready to take the next step?  Next steps might include 
  • hiring your first, or next, employee  
  • seeking new customer groups 
  • opening a second location 
  • adding ecommerce 
  • expanding your line of products or services 
  • Has the company mission or vision changed? 
  • Has new competition entered the market? Will this new competition threaten our market share? 
  • Does the company have the experience needed to begin seeking government contracting opportunities? 
  • Are there any threats to our supply chain? Do we need to consider adding vendors to ensure an uninterrupted supply chain? 
  • Are there new technologies we should be employing to operate more efficiently? 
  • Are there changes anticipated in the economy, government regulations, or consumer trends that will necessitate changes to our business model?

The answers to some of these questions require a hard look at your company’s policies and processes. Other questions can only be answered by research.  The planning process does take time, but it is important to the continued success of your company. 

The UMW SBDC can assist you in this process.  Our consultants can provide you with research, help you estimate start up costs and forecast revenues and expenses, prepare your loan package, and review your written business plan. To get started, please fill out our request for consulting form. We offer a Blue Print Business Plan Writing class, 6 – 8 times per year, which you may want to take, especially if you need to create a well-written document that you will share with potential lenders, investors, and/or landlords.