Every business, from start-up to an established multinational group, should prepare a business plan which is regularly updated. Each business plan should be tailored to the particular circumstances of the business concerned and often may be targeted at potential investors.
Benefits
The benefits of having a business plan include:
- providing a framework where cohesive decisions can be made and action taken;
- focusing ideas from a wide variety of groups with the business;
- the plan can be used to communicate ideas, decisions and actions to people within the business;
- providing a basis to raise finance through a professional document which can be presented to banks and venture capitalists;
- financial backers to the business (e.g. shareholders and bankers) draw confidence from a business plan, thus making it easier to raise future funding for expansion, new projects etc;
- identification of action which will improve profitability and cash flow;
- providing management with a benchmark by which to monitor actual performance against target set in the business plan;
- identification and reconciliation of conflicting objectives (e.g. between major shareholders, partners, divisions, or product lines); and
- the very process of preparation concentrates the minds of key executives on where the business is going – an issue which is often overlooked in the day to day management of business.
