As any financial planner would tell you, a business plan is an essential part of any business. Good financial planning shows investors that you are serious about your business plans, ensures investors can actually understand your plans and goals for your business and show them – and you – what the predicted profits will be. A financial advisor can create the business plan you need in order to generate interest from lenders or angel investors so you can start up your business.
But that is not the only thing they do. Many business owners have future plans and goals to expand their business. They may intend to use the profits from the business to do this, but they may not realise that is not always possible. It is not wise to use up all your profits on expansion, because it might run you short of emergency funds, or worse still, the funds you need to pay suppliers, rent, insurance and all the many other costs of running the business.
If this happens, you may be tempted to forgo paying those insurance premiums, then where would you be if a fire consumed your business or if an expensive piece of equipment broke down or got hit by lightning? Keeping some of those profits aside to be used in emergencies is wise. Don’t be tempted to dispense with the things that can protect you from risk of loss.
In many cases it is better to get another loan to pay for the expansion rather than use money from your profits. This is where once again, a financial planning professional can create the kind of business plan that will bring investors to the table. And if you kept that planner on from the time you first started up, you can be sure they will do a good job of it because they would know your business inside out by then.
So you don’t just need a business plan before you start your business; you also need a new one before you expand. That way, investors can see that the idea is a viable one and that you are on the right track financially. You may also need a great marketing plan to help convince investors.
Apart from convincing investors to give you a loan, a business plan can give you more control over your business. It can –
- Help you see what is and what isn’t working so you can change if necessary
- Keep you on top of your goals and plans for the future of the business
- Help you adapt to changes in the environment of your business
- Ensure you make the most of new opportunities as they appear
If business planning seems to take a lot of time and effort, you may need to change that mind-set and look on it as an opportunity to create a better, more successful business.