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Helping Businesses Reach Their Financial Peak
Should I Have a Business Plan For My Business?
Many business owners ask themselves this question every day. They also wonder whether or not a business plan will help them increase their chances for success. Here are just a few of the reasons we hear for not having a plan: I know my business, why do I need a written plan, I have the plan in my head, my time is better spent running my business rather than writing about it, the plan will be obsolete the day after I write it. However, studies show that 85% of the businesses that developed business plans were in business after 3 years. This is not bad when you consider that 7 out of 10 businesses fail in the first 3 years of operation.
Having a comprehensive business plan is one of the keys to a successful business. It helps a business owner not only crystallize their thoughts and ideas about a business venture, it also helps them maintain a focus for the business today and in the future. This can actually save the business owner time in the long-term. It is a useful document when communicating your business to: outside investors, business partners, existing and new employees, customers and suppliers. It helps to educate these partners on your company goals and objectives as well as your plan to achieve success. It also lets them know how they fit into your plan and what's in it for them.
A business plan can take many sizes and shapes from the one pager to the book depending on the audience. In general, the document should be a comprehensive plan that covers the next 3 to 5 years and includes all the aspects of running your business such as: Executive Summary, Vision/Mission, Goals/Objectives, Business Description, Marketing/Sales Plan, Manufacturing/Operations Plan, Management Plan and Financial Plan. The business plan should be a cohesive document with all its components aligned. For example, the marketing and sales plan should be aligned with the revenue projections included in the financial plan. A business plan can usually be done in 20 to 40 pages. The executive summary included in the plan should be no more than two pages in length and should include the key information from the plan. This executive summary can be given to business partners and investors to introduce your business and give them enough information to determine if they should proceed further with you.
The business plan is a tool to help the business owner more effectively manage their business, so the business owner or management team should write it. The knowledge gained by the business owner when writing the plan is extremely valuable and can help them to refine their business strategy. Using outside advisors to help the business owner write the plan can be helpful as well, if the business owner has never written a plan before. However, the business owner should stay actively involved in writing the plan to get those learning's we mentioned above. A business owner that has been intimately involved with writing their business plan will be much better prepared to communicate this plan to outside investors and partners.
Once the plan is complete, it should be used as a living document and kept up to date. It should be updated for changes in the business. It should also be reviewed on a regular basis to determine whether or not the business is heading in the right direction and meeting its goals and objectives.
Having a good business plan is one of the keys to a successful business. Studies have shown that businesses with business plans are much more likely to be successful than those without plans. So if you find yourself making those excuses for not having a plan, its not to late, set aside some time to put your plan in place for 2005 and beyond.
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Pinnacle Consultants L.L.P.
20704 N. 90th Place
Scottsdale, AZ 85255
P: 480 980-3977
F: 480 585-1920
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Business Financial Analysis