So who needs a business plan anyway?
Javier Marin, a consultant at the Florida SBDC at USF in Lakeland, often gets questions regarding business plans. Questions range to cover the following:
- Why do I need a business plan?
- How often do I need to write a new business plan?
- Do I really need a business plan?
Marin, who has been involved in strategic planning since the 1990s, asks his clients not to underestimate the value of a business plan. A business plan should be written whenever an individual is considering a new venture. Knowing where you’re going and how you will achieve your business goals is the most integral part of business planning. Furthermore, if you’re looking for financing or to attract investors you will need a way to relay your concept. That is your business plan.
The business plan tells the story about your concept, how you plan to operate your business, the industry in which you will be competing, and your financial projections. Marin often mentions to his clients that a business plan is a “living document.” He encourages his clients not to just put the business plan away on the bookshelf.
In fact, Marin encourages business owners and managers to keep their business plan under their pillow. “It’s very simple,” Marin said, “most business owners have their best ideas at 3 a.m., so what better place to keep your business plan but close to you when you have your best thoughts.”
Once a year, managers and business owners go through the budgeting process. This means that there will be some expectations about sales increases, operational changes, and financial projections; and the business plan should be revisited. Marin said that it is not necessary to rewrite the business plan but rather, “it should be updated to reflect any changes with the product offering, the industry, or the company itself.”
In cases where a company is planning to introduce a new line of business, it is critical to understand how that line of business will fit within the company’s long-term strategy, operations, marketing, and within its target market.
In cases where there is a need to purchase equipment or real estate to support sales increases, it is important to update your business plan to reflect how the increased sales affect your balance sheet in terms of borrowing and assets. These changes invariable affect operations as well as staffing.
Marin warns that a business plan is not an owners’ manual, but rather a guide that will help you navigate the nuances of entrepreneurship.
“It is a living document as important as your financial reports, your business invoices, your corporate documents, or your tax returns,” he said.