Does an Existing Business Need a Business Plan?
May 2nd, 2023
In a word, yes. People often think a business plan is only needed for start-ups. In reality, a business plan may be needed at any time in an organization’s evolution. An existing business will rewrite or update their business plan in order to better meet the needs of a changing environment. Additionally, banks may require them to support loan applications.
What is a Business Plan?
A business plan is a little like a wedding planner. There are basic items that all weddings need – invitations, attendants, budget, etc. Businesses need the same type of organization. A business plan should include:
- A “Picture” of your business: Unless you are 8, you don’t plan a wedding without having a particular person in mind to marry. Your business plan should provide a clear picture of what is going to happen. A detailed description of the product(s) or service(s) that the business plans to provide.
- Market research: It is important to go into marriage and business with your eyes wide open. Although you may have created a product that you think is fabulous, you need honest opinions from strangers before you commit.
- Competition research: This area is often overlooked but is crucial. You need to recognize which companies you directly and indirectly compete with. What are their strengths and weaknesses and how quickly can they adapt to your business coming to the marketplace.
- Management Assessment: An experienced Maid of Honor can keep a wedding on-track, a good manager can do the same. A business plan should contain sufficient information on key managers so a reader can assess their capability.
- Marketing Plan: Your target market should be clearly defined as should your method of reaching it.Typically, ‘targeted’ guests are sent a printed invitation to attend a wedding. They are not expected to know the date and time from a want ad placed in a local newspaper.
- Financial Projections: Like a budget for a wedding, a projection of start-up expenses should be produced alongside a projection of cash flow for the first few years. This will help you to assess whether you have the resources to tackle the phase on your own, need funds from outside, or need to lower costs.
There is no such thing as a one-size-fits-all business plan. The size and structure of a business plan will vary by industry, region, and business size, among other things.
Once completed the business plan should not be a static document. The plan should be revised on a regular basis to make needed adjustments based on:
- New competitors entering the market.
- New product or service development that may compete with your offerings.
- Opening new locations or new channels of delivery.
- Changes to industry regulation.
- Changes in the marketplace.
At minimum, business owners should assess and amend their business plan on an annual basis.
The thought of writing hundreds of pages for a business plan might be what deters some small business owners from embarking on completing or editing one. There are several ways to jumpstart and streamline the process:
- Start with an outline or checklist.
- Get input from your team of professionals– Have the Accountant or Bookkeeper assist with financial items (Projections, budgets, etc.).
- Try using software or a web-based planner.
- Consult an industry group.
- Review information on SBA’s website.
Who will use my business plan?
- You will use it as a roadmap for startup or growth.
- Your investors, business partners or your banker assess potential and monitor progress.
- Your suppliers and employees to help you to solve problems or make key pivots.
Most of all, a business plan can be used as a source of truth from your startup journey all the way through expansion and a potential sale. Your values, market position, and business scope should be congruent with how you describe them in this document. If not, an update may be in order.
Community West Bank Understands Small Business Needs
At Community West Bank, we understand the importance of having a strong financial network to back up your business plan. We support local small businesses and have an experienced team that can help you get the best options for banking, lending, and financial advice.
A good bank can’t write your business plan for you, but knowing your hard-earned money is in good hands can help reduce your stress while you grow. If you’re looking to protect your financial future, please reach out to us today.