Why Write A Business Plan?

Comments Off on Why Write A Business Plan? 04 August 2011

As a business coach to a lot successful businesses, I have often pondered why banks demand that you write a long detailed business plan before they are going to consider offering loans for a startup business.

If I were to work with you to double your business, we might write a business plan that fits onto merely a single page. So why is it that banks insist on these great long books that finish up sitting on racks for evermore truly a distant fantasy compared against what they could be.

So I decided to ask Denise, my local bank’s business executive, to get her opinion about what makes the long form business plan so handy to her when assessing a business.

The truth, it turns out, is ideal common-sense and has real value. By writing a business plan that stretches over 15 or more pages, she explained, you demonstrate that you have rigorously thought through your business, considered the positives and the negatives, and are still prepared to go thru with it.

Additionally it also demonstrates that you have got the power to handle some bureaucracy, too. Managing a business is not all making deals and sell, sell, sell. It's also about the nitty-gritty of managing your cashflow, recruiting the right employees and keeping things moving in a constantly positive direction.

Within your business plan you’ll also include some financial projections for your business. While these could just be something of a fantasy when it is time to make it all happen, it does make you take in mind the full costs of running your business before you even get out of the blocks.

This foresight into your costs might just be your life-saver. As an example, one business I know took out a lease on a high-street property at the very top of the economy in 2006. 4 or five years after, he was regretting agreeing to a deal that locked him into a high rent that will only be reviewed upwards and that has no break-clause to get him out if the business didn’t flourish.

It’s because of this example that a wise advisor will always recommend that you do an upbeat outlook and a pessimistic outlook with your financial planning, then use the lower to steer all of your contract talks before you finish up stuck.

Lee Duncan is an author from the FT Prentice Hall publishing list. His clients call him the double your business coach as he helps them to put in place clever methods that increase profit and make their businesses grow.

categories: business plan,business finance,business loan,business bank,contracts,business coach,business coaching,business advice,entrepreneur,start a business

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