Whether it is for getting your business idea off the ground, growing your startup or expanding your business abroad, one of the most important document you will create is your business plan.
It is the central place where you share all the important information about your new venture — the ideas behind your business, what you’re going to sell, your business model, your potential audience, marketing, finances, projections, and more. It represents both a map for the future and a high-level action plan of how you will get there. An effective business plan is important for putting real structure, facts, and figures around your ideas.
5 Reasons Why the Right Business Plan Matters
1/ To help you make key business decisions
Need to decide whether or not to rent a new office or space? Want to hire new people? New obligations, generally in the form fixed costs, are key drivers of business growth.
You need to calculate whether your growth prospects and numbers justify taking the increased fixed cost (and associated risk), which may include answering key questions such as:
- Does your sales growth prospects and plans justify taking on an increase in rent?
- How will new people help your business grow and what exactly are they supposed to be doing?
- Do you need new assets and if so how many and whether you should buy or lease these assets. Use your business plan to help decide what’s going to happen in the long term, which should be an important input to the classic make vs. buy. How long will this important purchase last in your plan?
2/ Financing
Your business plan is vital for getting investors and/or lenders to put money into your company. Business plans are part of a “due diligence” process — where potential investors will dig into the details behind your business before they decide to make any investments.
If we had to compare your pitch with your business plan:
- Your pitch is all about persuasion, inspiration, and your vision for the future.
- Your business plan is all about the details of how you’re going to do that.
This would be for both equity and venture capital financing (for startups) or debt and bank financing (for both startups and SMEs). Investors and lenders expect the plan to cover all the main points which we will cover in our next blog post: How to Write a Business Plan Based On The Business Model Canvas (Hong Kong Edition).
3/ Starting a new business as an entrepreneur
A business plan is not only important for financing a new business idea. An entrepreneur should also use the plan to establish the right steps in starting and building their business, including what you need to do, what resources will be required and when you will carry out each of your action plan.
4/ Be strategic in your business operations
Good management requires setting specific objectives and then tracking and following up. As your business grows you need to organise and plan better, and communicate the priorities and business objectives better especially to your key staff and management team. Be strategic. Make selected portions of your business plan part of your new employee training.
5/ Grow your business
Establish strategy and allocate resources according to strategic priority. Use your plan to set targets for new partnerships and alliances, and selected portions of your plan to communicate with those partners. Also it is good practice to share selected highlights or your plans with professionals which helps with your business such as your lawyers, accountants and consultants.
Your Next Step
Get a Business Specialist to Work on Your Business Plan at Workeroom
Our Workeroom business plan experts based in Hong Kong can help you with every aspect of writing and reviewing your business plan. They will work with you to understand your business idea, gather together all the relevant information, and deliver a comprehensive document you can use with investors and strategic partners.
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