Why would you need a business plan for an established business? Did you ever have one? Maybe things are just fine, business is great, and your business is making tons of money. And very possibly, your business is doing the best it can already. However..what if it isn’t? How will you know?

Let us consider for a moment that your business could be better. Without a thoughtful, honest and focused look at your business and the industry you are in, you may be missing opportunities. Or you may not be aware of certain market indicators that would cause you to revisit your current way of doing things. To be ahead of the game; “forewarned is forearmed” so to speak.

A business plan will bring all of the components of a successful business into focus. You will have an excellent handle on market conditions, your competition, new methods, services or products within your industry, pricing information, potential new clients or customers, marketing and sales techniques, opportunities for new business relationships, revenue streams and much more.

For a start-up business, it will tell you whether your plans make economic sense and if a possibility for success exits. It also becomes your roadmap to develop your business and will be the tool that helps convince lenders or equity partners to invest or reinvest in your venture. Lenders of any type will not lend unless they know that you have thoroughly researched your business idea or expansion. And even then, you had better be prepared to answer a lot of questions. Of course, you knew that.

If you are buying a business, ask to see their business plan. You need to see what they had in mind for the business and if they were on track. You may be asked to sign a non-disclosure. If after reviewing their plan, you choose to continue with the purchase process, write your own business plan, or hire someone to do it for you. Make the purchase contingent, if you need to, but do not buy a business without a business plan of your own. It could end up saving you quite a bit of money or making you a lot of money. Either scenario is much better than losing your shirt.

There are a very few reasons why you would want to write a business plan.

1. To evaluate initial startup costs.

2. To establish the fundamental viability of a project

3. To define your products, services and customers and assess competitors.

4. To map out the business model, the goals and the strategy used to achieve them.

5. To communicate to others (banks, investors, partners, etc.) the business idea.

A simple business plan can be written very quickly by just completing the following easy 10 step formula.

1. I am…

Introduce yourself. Tell the reader of your business plan who you are, your background, education, professional experience, your successes to date.

2. My product or service is…

Tell them what product or service is, what it does for the customer, any unique features or facets, how it is produced, etc.

3. My customers will be…

Describe your target customers and why you have chosen to market to these customers. Use any back-up evidence from your experience, reports, white papers, market research, etc.

4. My customers will buy from my business because…

Describe any unique selling points or advantages you have. Are you providing better value, guarantees, superior quality, reduced risk, better location, etc?

5. My customers will pay…

Explain how much your customers will pay for each of the products or services you will provide. Describe any up-selling or cross-selling opportunities and how many times a customer will buy from you in a typical year.

6. I can make…

Explain how many products you can produce or services you can provide in a typical year. Back this up with whatever evidence you have to support this.

7. To make each unit of product costs…

Explain how much each unit of product costs to produce. If your business is a service business describe how much it costs to provide the service.

8. The start-up investment I require is...

Detail how much start-up investment the business will require and what you require it for.

9.I have a viable business because

Explain why your business is viable and what evidence you have to support this claim. This will require some market research to demonstrate their is a viable market for your product or service.

10. In summary…

On a single page, list the main points of you plan in bullet point form. This is single most important part of your business plan. It will be read first by all readers of your business plan and will determine if they will read further and ultimately support you business idea or not. Write this summary last but put it at the front of you plan.

Now that you drafted a simple business plan you are in a great position to assess the initial viability of a business at a very high level. You may want to consider fleshing out this simple business plan into a more standard, detailed business plan format before presenting it to potential investors, partners or banks. They will want to see some detailed financials also – Income Statement (Profit and Loss), Cashflow Statement and a Balance Sheet.

A famed book by Stephen Covey highlights one habit that makes individuals and organizations succeed – begin with the end in mind. This is a very good answer to the question “why write a business plan”? It is tempting to put up a business and have a see-what-happens-next approach towards its management, twitching things along the way and be flexible enough to the challenges of running a business. But the truth is, even though that sounds simpler than drafting an exhaustive plan in paper, it can really get complicated – fast. In fact a business without a business plan is, put bluntly, a business that is planning to fail. A business must be intentional, and nothing can facilitate this better than having a written plan of what the business is all about, its direction, its goals, and its ultimate purpose. This will serve as the glue for the stakeholders of the business, a point of agreement on how the business should be run, and the route it would take to realize its profit targets.

It is simply impossible to grow a business if there is no tangible point of reference to where the business should go. Vision, mission, objectives and values of the business are all included in the drafting of the business plan, thereby making it possible for organizations to have objective metrics of performance. It is only then changes and adjustments can be effectively implemented. You simply cannot improve what you cannot measure.

Writing a business plan is important because it allows a business to sell itself better to its customers. The business plan is a 360 profile of your business model, giving you a bird’s eye view of what you can offer to your clients. Marketing would not be as hard because the point of differentiation and the niche market you want to develop overtime can be clearly seen. You can identify your competitive advantages and then capitalize on that exhaustively. It can also bolster your positioning efforts because you understand the strengths of your services or products. You can simply develop strategies that puts you in the best spot to both retain and attract new customers.

Why write a business plan? One of the most profound answers to this question is to be able to get the right people to run the business. It is of course a well established fact that a business is as good as the people that leads it to greatness. Well, you can have the best of the best in the field, but if they do not fit in, they are doomed to fail in establishing your organization as an industry leader. A business plan can help you implement a very good human capitalization effort. This simply means you are able to identify the right person for the job and then help that person identify himself with the job, and then the business.

Many small and medium enterprises downplay the question of why write a business plan. And this is the reason why many fail to reach its growth projections. Do you want your business to run smoothly? First things first. Write a business plan!