Why it’s important to have a business plan

Nikki Griffiths, Senior Business Development Advisor

Business South West, Western Australia

Business South West helps small to medium businesses in the south west of Australia.

Senior Advisor Nikki Griffiths joined us for this Power Tip to talk about the importance of a business plan.

She says less than 20% of businesses have a strategic plan and an idea where they’re going.

“I find it amazing in this economic climate that we just don’t have enough people preparing business plans,” Nikki says.

5 reasons to have a business plan

1. It’s a map for the future

Where are you starting from? Where are you heading to?

2. It supports the growth and funding of the business

Will you need to borrow money? A business plan is a great way to work out exactly how much you need and where it will be used in the business. Marketing? New staff? Plant and equipment?

“It’s amazing how many businesses don’t have an idea of how much money they need not only to start their business, but for the ongoing growth,” Nikki says.

3. It develops a communication for a course of action for your business

Where will you be in 12 months, 24 months, 5 years? Every 6 months your business plan should be updated.

4. It can help you to manage cashflow

Most of the businesses Nikki deals with on a regular basis have cashflow issues.

5. Have a strategic exit

Are you going to sell the business? If so when will you sell it? Who will you sell it to?

“But I’m too excited about my new business idea to spend time making a plan!”

Nikki says she likes to charge into a new business too. She’s very much an advocate of ‘don’t waste too much time’. But she always prepares a business plan and a feasibility study first to see if it’s going to work.

She says, “I think up about 5 new business ideas every week, but most of them won’t work because they wouldn’t make money. I don’t believe in having a business without making a good profit.”

Visit the Business South West website.