In this article from the September issue of Better Business Focus, Alan Gleeson, MD of Palo Alto Software Ltd, creators of Business Plan Pro business planning software explains "Why Business Planning Is Not Just For Start Ups."
It is a common myth to assume that business planning is only done by new business start-ups, perhaps just in the conception stage.
Many mature companies get great value from preparing a business plan because it can be used throughout the business life-cycle to help make more money.
In particular, a business plan will:
- Help manage growth
- Help you to assess the impact of new ideas and check that they make sense commercially and financially
- Help value a business when the time comes to consider a sale.
In this article, Alan explains how business planning can:
- Encourage intrapreneurship. This means that you can capture the entrepreneurial ideas of your staff while keeping them employed in your company.
- Help manage performance. Why is performance different from that expected in your plan? What can you learn? What can you do differently to improve?
- Plan strategically. Preparing a business plan gives you a chance to take the lead and be proactive. Rather than just finding yourself reacting and responding to your competitors' moves, preparing a strategic business plan forces you to think. In particular it forces you to focus on how you can compete more effectively.
- Help you prepare for future exit. It's been said that the only reason to start and build a business is to sell it! Your aim then is to make sure that you develop your business in a way that maximises future business value and a business plan will help you.
- Support a business valuation during the sales process. By clarifying assumptions and making future financial forecasts explicit, a business plan will make it easier for negotiators on both sides to fix on a suitable business value.
Alan has written an excellent article on why established companies should continue to prepare business plans. To find out more then subscribe to the free Partners for Profit newsletter including Better Business Focus.
Please don't ever think of business planning as busy-work.
Do it and do it well and it will make a big difference to your ability to creature future wealth, both in terms of the profits you make while you own your business and in the price you get paid when you finally decide to sell.
I recommend that you take a look at Business Plan Pro (UK version, US version affiliate links) the business planning software that Alan's company Palo Alto produces. It is highly recommended as an easy to use, great value software programme that will allow you to prepare a business plan in a structured way.