According to the Small Business Administration (SBA), a business plan is defined as “a document that precisely defines a business, identifies its goals and serves as its resume”. The SBA goes on to describe the purpose of a business plan as “a source that will assist the business owner to allocate resources properly, handle unforeseen complications, and make the right decision”.
Still, most business owners feel a business plan is unnecessary. Nothing could be further from the truth. A thorough, well written business plan is one of the most essential and critical requirements of any business. Many business experts claim there is a direct correlation between business success and having a comprehensive business plan – where a business plan actually serves as a roadmap to business success. This means that experts believe a strong business plan will increase the odds of a business to survive and thrive.
Not only will the probability of business success increase, a solid, written business plan keeps the business owner focused on goals and objectives, financial projections, future asset and personnel needs, and cash and financing requirements for future growth and expansion. It keeps the business owner “on course” with marketing, advertising, sales, websites and other key business elements since the business plan contains goals and budgets that the business owner can refer to at any time.
If these were not reason enough, a business plan is a must if financial support is being sought. Business lenders, private investors, leasing companies, vendors, suppliers, landlords, grant providers and the Small Business Administration (SBA) all require an up-to-date written business plan be submitted with any application for financial support, regardless of the amount being requested.
In summary, a well written business plan is an essential requirement for every business. It serves purposes far beyond simply a document needed when applying for a loan. A written business plan, including the financial projections and goals it contains, increases the chance for business success and prosperity. Business owners devote their savings, their assets and their lives to their business. A business plan is the most sensible investment they can ever make in the future of their business.