Why Business Planning Is Important for Your Business Growth
How often do you include time to plan for your small business in your schedule? If it isn’t something that you do regularly, then let me encourage you to build some time into your schedule for planning.
Many people think that business plans are only useful for new businesses. But, as this article from the Small Business Administration states:
The truth is that business planning offers serious benefits for everybody in business.
In this post, I share the reasons why business planning is important for the success of your business.
I recommend that you start with high-level planning at the beginning of the year and then go into more detailed business planning every 90 days. Taking that time to plan the projects I want to tackle and the areas of my business that I want to grow has been vital to my own success.
Why business planning is important to make your business successful
Dwight D. Eisenhower once wrote in a letter “Plans are worthless, but planning is everything.” He went on to say that “the planning process demands the thorough exploration of options and contingencies.”
This quote sums up my thoughts about planning. Planning is not about creating a document (the plan), although that’s a helpful benefit.
Business planning is about thinking. The value lies in the process. When you spend time planning, you’ll think about your business in ways that you may not have thought about it before. You’ll look at it from different angles and consider the actions you want to take to make it successful.
Plans are worthless, but planning is everything.
Business planning helps you focus on the right things
When you go through the planning process, you’ll decide what’s important for your business. This is enormously helpful when you get into the day-to-day grind. With a clear plan, you can focus on what’s most important, rather than spending time trying to figure out what you should be working on.
This is much more efficient than trying to decide what to do every day. When you do that, you generally spend your time putting out fires – dealing with the most urgent things on your plate.
With a plan in place, it becomes easy to work backwards to create efficient and effective weekly and daily to-do lists. Then you can focus on what really needs to get done each day. And that’s how you reach your goals.
Business planning encourages you to think outside the box
If you don’t step back and look at the big picture of your business from time to time, it’s easy to fall into a rut of doing the same things over and over again.
As you plan, you’re going to set goals, right? And generally, those are going to be big goals. Setting a big goal encourages you to think outside the box.
Why?
With a big goal in front of you, you start to think of ways to achieve it. You’ll get creative and think of things that didn’t occur to you before.
Business planning puts your subconscious mind to work
So far we’ve talked about the active elements of business planning, but there’s another element at play. Once you’ve started thinking about what you want to achieve and how you are going to do it, your subconscious mind keeps working on the problem.
While you are busy plowing through your to-do list, chauffeuring the kids around, or even sleeping, your subconscious is busy working on your plan.
Think about it. How many times have you awakened in the morning with the answer to a big question? Or had your best ideas come to you in the shower? That’s the power of your subconscious mind. Planning just points it in the right direction.
What is the purpose of business planning?
The purpose of planning is to make decisions about the future of your business. The purpose of a business plan is to document those decisions so that you can refer to them going forward or share them with other stakeholders.
You will establish your strategy
The main purpose of business planning is to establish your strategy. Everything else in your plan will support the execution of your strategy.
The main purpose of business planning is to establish your strategy. Everything else in your plan will support the execution of your strategy.
You will set strategic objectives
Successful businesses set specific business objectives and then track and follow up on their execution. Without objectives, how do you know what you want to have happen?
Business planning allows you to be strategic and work toward the objectives that will be most helpful to your business.
You will allocate resources
While you are planning, you need to allocate resources in a way that will help you achieve your strategic objectives. What services do you already use to keep your business running? Are there new services you need in order to grow your business?
Also, think about assets that you may need to acquire or replace this year. Do you need a new computer or printer? What about software? Or maybe photographic equipment or a new cell phone.
And of course, as a solopreneur, your most precious resource is your time. Where will you spend it? Do you need to hire help?
The business planning process can help you clarify your thoughts about how best to allocate your resources.
You will decide what NOT to do
Just as important as choosing what objectives to pursue is deciding what NOT to do. You can’t do everything. There simply aren’t enough hours in the day. You have to decide what to let go of. Making realistic decisions about what you will and won’t do is an integral part of the business planning process.
What should you include when making a business plan?
There are certain elements that you’ll want to include in your business plan. Keep in mind, however, that this is your plan. If something doesn’t make sense for you and your business, it’s okay to skip it.
Your vision & mission for your business
Your vision and mission set a strong foundation for your business. Vision and mission express why you do what you do. They help you attract the right kinds of clients, keep your business focused on the right path, and get you through the tough times.
Do you have a vision statement and/or a mission statement? Vision and mission statements are a great way to start your business plan. They’ll help you keep your eye on the big picture.
How is your business monetized?
How is your business monetized? Do you sell physical products? Digital downloads or e-courses? Are you a service provider?
Which revenue streams are working well? Are there any that you want to drop? What about new revenue streams that you want to add to the mix?
A competitive analysis of your market
Do some basic market research. Figure out who your major competitors are, who they sell to, and what they offer.
It’s always helpful to know what the competition is up to.
And next year, when you do your annual planning, you’ll be able to make a comparison. Have your competitors changed? Who are the new players? What are the hot new products and services?
It’s always helpful to know what the competition is up to.
A quick SWOT Analysis
A SWOT analysis sounds technical, but it doesn’t have to be. Grab a big piece of paper or a white board and divide it into four sections. Then brainstorm your strengths, weaknesses, opportunities, and any threats your business is facing.
A SWOT analysis will make your business strategy stronger because it will ensure that you’ve thought about both internal (strengths and weaknesses) and external (opportunities and threats) factors.
What are your high-level goals?
For annual goals and objectives, it’s best to stay very high-level. This is not the place to go into too much detail, because priorities and activities will likely change throughout the year.
Include a few high-level, “must-do” goals in your business plan. These will likely include your revenue goal and a few other specific targets that you want to achieve.
Related Post
For more information on setting goals, check out Ultimate Guide for How to Achieve Goals.
What is your marketing strategy?
Marketing is an important part of your annual business plan. How are you going to market and promote your business? Do you have a social media strategy? Will you use paid advertising? Or public relations?
Include some information on your target market or your ideal customer. It can also be helpful to decide if your primary focus will be on acquiring new customers or on selling more to your existing customers.
Depending on your business, you may want to have a separate, more detailed marketing strategy document. If so, then you can simply include an executive summary of your marketing plan in your overall business plan.
Action Items to achieve your goals
Your business plan should include the specific actions that you will take. This is when you start getting into the nitty-gritty details. What are you going to do? By when?
For a deeper dive into what you should include, check out this post on how to create a strategic business plan.
Your business plan is a living document
At this point, I hope you see the importance of a business plan. Keep in mind that your business plan is a living document. It’s not written in stone. You can change it. Remember President Eisenhower’s remarks above. The plan itself isn’t the end-goal. The strategic planning process is where the true benefit lies.
If you are ready to create your own strategic plan, then be sure to download this free business planning workbook:
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