Part 1: Does Every Business Need a Plan?

Absolutely. Every business needs a plan. Not everyone will agree with me but read and you will learn what changed my thinking.

This is the first part of a two-part series answering the question: Does Every Business Need a Plan? Yes, my new book Tips and Traps for Writing an Effective Business Plan is now shipping from Amazon $3.00 from the sale of each book will go towards micro-business loans via Kiva.org

There is an entire segment of business advisers who say you do not need a business plan. There are many entrepreneurs who also believe that, I know because I used to be one of them.

So what changed my mind?

Success was elusive despite being a third generation entrepreneur. If you had asked me why things worked or why they hadn't I would have many 'reasons' but deep down I knew something was missing. I just could not tell you what it was and that ate away at me.

It ate my confidence and drive. I tried to work harder and longer but the truth is I did not even know what a 'business plan' was in those early days. In fact, the only real exposure I had to any sort of written 'business plan' was in the 1980's. I hired a consultant to check the viability of a business I wanted to buy. It was the best money I ever spent.

That report showed the cold, hard reality of buying that business and I decided against it, am I ever glad I did. The profit margins were slim and the competition fierce plus that entire industry underwent a significant restructuring that would have created significant hardship for me had I owned that business. But that is hindsight and a business plan provides foresight.

The Process of Writing a Business Plan = Insight

I have been 'in business' in some shape or form almost my entire adult life. I always thought I knew what 'planning' was until I hired a consultant to help me write a business plan 17 years ago. As I look back I learned more about myself and my business in the process of running my business. What the process of writing a business plan did for me was expose the weakness in many of the assumptions I made about my business. With that knowledge I could make adjustments and take appropriate action.

Knowledge + Action = Power

Developing a detailed business plan will provide you with an opportunity to shape a powerful business development strategy, whether your goal is to:

1. Get financing to start a business.
2. Get financing to expand your business.
3. Be more organized and increase your odds of success.
4. Identify the value of your business and prepare a plan for selling your business.
5. Create a plan to buy a business.
6. Create a management succession plan to facilitate your retirement.
7. Revitalize your business and identify new markets and business opportunities.
8. Reorganize to allow you more free time away from the business.
9. Build a Financial plan to improve profitability.
10. Decrease your margin for error and increase profitability through rigorous management of staff and resources, as well as leveraging market conditions.
11. Clarify goals, objectives, and strategies in a partnership or corporation with multiple directors.
12. Improve effectiveness and management of operations.