Business Solutions

Setting a goal should never be the main thing. It is making decisions about how you will achieve it and then staying with that plan.

What is the Purpose of a Business Plan?

I am often asked, “What is the purpose of a business plan?” Well, it really depends on the perspective of ‘purpose.’ From a ‘strategic’ perspective, your business plan documents your most important goals and what specific actions you plan to achieve them.

From the perspective of ‘communications and investment,’ your business plan demonstrates to both investors and lenders that you have a well-envisioned business opportunity that earns their strong consideration and investment dollars.

So, the three core or chief focal functions of a business plan are to serve as (1) an Action Plan, (2) a Road Map, (3) and as a Sales Tool.

The Action Plan – A business plan can facilitate and motivate you to action.  Without a formal plan, the process of starting a business or engaging in venture or project may seem too large, too daunting, and way too complicated, thus keeping you idle for years considering if and when to start.  Like a jigsaw puzzle, a business plan helps you separate all the pieces of starting your business, allowing you to examine each piece individually.  This is important to understand, since instead of seeing one large problem, you have a series of much less significant problems. And of course, by solving each the small problems, what was once a large problem is by design solved.  For that reason, the very process of writing a business plan certainly helps your motivation to take action, simply by breaking down what is on the face of it an insurmountable task of starting a business, into many smaller, much more approachable tasks.

Defining a business plan can be difficult, as the definition might be different for every organization. A business plan, in its simplest form, will usually define where you want your business to be within a certain period of time (usually five years) and how you plan on getting there. A business plan is as important for starting a business as blueprints are for building your house.

Road Map – After you’ve started your business, a business plan should be an invaluable tool to you to make sure you’re on course to meet objectives and goals, and always moving down the road you want to go.  Understanding that at times it’s very easy to lose sight of your objectives and goals, a business plan can help you to maintain focus, while serving to facilitate others understanding your vision for the business including suppliers, customers, employees, friends, and family.

You define how you will operate your business as part of the business plan including descriptions of the management team, the marketing strategy, the methods which you will use to effectively interact with your customers, as well as who your customers are (target market niche). Considering that a business plan may project strategies that reflect the management style of the founders of the business, the definition should be clear but always flexible.

Sales Tool – Many will agree that maybe most importantly, a business plan can function as an invaluable sales tool.  If you’re like most entrepreneurs, you will almost certainly need a source of outside financing to start your business, and a business plan is the exact tool you need to convince investors to be a part of the opportunity you present.  There may be times when you want and need special considerations from suppliers or even customers, and a business plan is the tool you need to get them.  Finally, family members may need convincing, and don’t forget even yourself, that your ideas will turn out well and be successful. A well-written and documented business plan is a great tool to sell yourself and people close to you on the benefits of proceeding with your concept.