05 Jun Are Business Plans Still Relevant?
Last month I asked a local business owner about how she and her husband started their business 4 years ago. “Did you have a business plan?” I asked. She laughed, literally, and then proceeded to tell me their story. When her husband’s employer retired and sold the business, he decided to start his own company. Within a matter of days, they leased a shop, purchased equipment, applied for their operating license, and had spent all of their $5,000 in savings. But a written business plan? No way. The plan was all in her husband’s head. He knew his craft, he had loyal customers who would follow him, and he was confident he’d be successful. And they are.
This is typical for many small businesses. Why spend time and money on a written plan when you’re better off pouring your resources into starting the business? This approach works just fine for most entrepreneurs. Just ask a few. However, there are still some situations where a business plan is highly recommended, if not absolutely necessary.
So, Are Business Plans Still Relevant? Yes.
A business plan is still relevant in these scenarios.
#1 Getting a loan.
In order to get money from a bank or other lending agency, you’re going to have to show them how you plan to use the money, and more importantly, convince them of your ability to repay the loan. This is all done in a written business plan.
#2 Attracting investors.
If you’re going to present your business idea to a potential investor, one of the most efficient ways to convince them of your credibility is to have a clearly written business plan. They may end up reading only the Executive Summary and reviewing your financials, but the rest of the plan is meat on the bones that you’d have to have figured out anyway.
#3 Going into a partnership.
When you’re considering entering a partnership on a business venture, there will be loads of details that you’ll have to work out and agree to before you can seal the deal. Doing this up front with a written business plan is highly recommended in order to avoid complications down the road.
At the end of the day, a business plan is never a bad idea, no matter what size or stage your business is in. But in order to use your resources wisely, there may be a better fit for your business than a full-fledged plan. That’s why we offer a suite of business planning services, from pitch decks and investor presentations, to financial projections and business plan briefs. Drop us a line to learn how we can support you in your business endeavors!
By Nina Gibbs, Managing Director
Savi Global provides business planning and advising, marketing strategy, and translation and interpretation services to American companies working globally and to internationals starting business in the U.S. For more tips, advice, and resources for your global business, subscribe to Savi Global’s monthly eNewsletter.