“Should I prepare a business plan?” is a question many businesses and entrepreneurs ask themselves. Yes, there are businesses that initially did not plan but were successful; however, at some point they had to put a plan together to understand what direction to take their business. They might not call it a “business plan” but it was something they put to pen and paper.
I am from the school of thought that when you take the time to think things through you will benefit. A business plan can help you fully think out your business by writing out your business goals and what and how much resources are needed to achieve those goals. Once the plan is completed, it also provides you something to measure your progress along the way and to make needed adjustments for business survival.
A business plan’s main components can serve as your roadmap for your business. The plan should include credible financial estimates based on your target customers, your market space, pricing and service or product offering. In addition, a business plan shows to outsiders such as bankers and potential investors that you are serious about your business because you took the time to analyze the business opportunity instead of betting that your idea will be a success. By no means will a business plan guarantee business success but it is better than planning to fail with no plan in place.
Financially, a business plan can help you gauge the money needed to launch and stay in business for x number of months. By knowing your cash burn rate you will know how fast your business needs to start generating cash or seek money from outsiders. Also, credible financial projections can help you determine the valuation of your company for your exit strategy for your business.
A CFO consultant can help you create credible financials based on key drivers of your business. The financials and key drivers are the essential building blocks for a successful business plan.