5 Reasons You Need a Business Plan to Grow Your Business

October 11, 2019
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Success doesn’t suddenly fall out of the sky into your lap. It’s the result of taking one step each day, in the direction of your dreams.

Jennifer Ritchie Payette

If your business is approaching the milestone of five years in business, you can take solace that some things have gone well. A significant number of small businesses do not make it beyond the 5-year mark. Moving beyond the 5-year mark and growing your business is not likely to happen by doing exactly what you did in the first five years, however. It is likely that your market has changed, your competitors have changed, and new technologies or service models are disruptive forces waiting to be exploited – by you or your competitors.

If you developed a business plan that got you to this point, now may be a good time to revisit assumptions. Or, if you are preparing the first plan for your business, the five reasons I am about to share may reinforce how important it is for the growth, profitability and long-term viability of your business.

Reason #1

A business plan, by its nature, creates the opportunity to challenge assumptions about key facets of your business or business idea.

  • If you have a pre-existing business plan or are developing a business plan for the first time, challenge the basis for every component or area within it. Question the accuracy of your data and assumptions.
  • Is/was the basis of the assumption you’re making for labor cost, pricing, or expenses valid – why or why not?
  • If you are an existing business owner are there “lessons learned” that should be evaluated and considered going forward?

Reason #2

A business plan helps improve your understanding of the competition.

  • Competitors – direct or indirect may have entered your market area. Have you researched how their product/price/value proposition may impact your company? How are their marketing methods or approach different or similar to yours?
  • Assessing your competitors’ strengths and weaknesses can only help you by having you consider how your company’s services and offerings compare. Is your company’s value proposition on par or better than your competitors?
  • Updating or including this important section in your business plan is fundamental.

Reason #3

A business plan improves your understanding of your customer(s).

  • What is or do you anticipate your customer mix and/or profile to be?
  • Ask your customers what they value about your services/products?
  • Remember, your firm does not exist without effectively serving customers so learning what they want now and in the next 5 years is crucial to developing a business plan that focuses on growing your customer base.

Reason #4

A business plan reduces the risk of pursuing the wrong opportunity.

  • Knowing which opportunities (i.e. projects, products, or service lines) are good fits for your company and those which are not is important and valuable.
  • Utilizing company resources on limited or unprofitable pursuits or projects takes away from other potentially more lucrative opportunities.
  • Pursuing the right opportunities will focus your team and company and lead to greater discipline in your marketing efforts.

Reason #5

A business plan helps you retain and recruit the right employees and managers.

  • After being in business for 5 years, you may have realized the importance of good employees and managers. If the goal is to grow your business, whether you’re just starting out or you’re looking to expand, a key focus is to be able to attract and retain key talent.
  • Define the attributes, experience, and attitudes you’d expect in all your employee and manager roles.
  • Assess whether your current staff measures up.
  • Re-assignments or other adjustments may be needed.

As an experienced business owner with a business plan that may have collected a little dust, or an entrepreneur preparing your first business plan, the five reasons I’ve shared why a business plan is important for growing your business are key to establishing a well-defined flight path to a successful, more profitable future.

Have you outgrown your current business plan? Have you determined what it will take to move your business to your next dream horizon? Share your thoughts, questions, or journey with me below in the comments section.