Do Small Businesses Need a Business Plan?

Entrepreneurs just starting out are usually focused on the nuts and bolts of getting their fledgling company off the ground. Many decisions need to be made, including the need for office or warehouse space, inventory, sales processes, and human resources. Creating a business plan is the last thing on the business owner’s mind – but it should be one of the first.

A Business Plan Helps with Funding

One of the best reasons for creating a business plan has to do with obtaining funding. Start-up capital is often necessary to get a new business off the ground and keep it running until it becomes profitable – an average of two to three years for most small businesses. And new businesses aren’t the only ones that need help. Well-established companies occasionally experience unexpected downturns. A business plan is invaluable when approaching the bank for a loan. Lenders will want to see a business plan that includes forecasted revenue projections, operating expenses, cash flow, and other financial metrics that prove the loan they’re making is a good bet.

A Business Plan Helps the Business Grow Faster

As crazy as it sounds, studies show that companies with an owner who takes the time to create a comprehensive business plan grow an average of 30% faster than companies without a business plan in place. Why is this? Experts believe that it’s due more to the time, effort, and deep dive needed to create the business plan rather than the plan itself. A business owner who takes the time to put together a good plan and then reviews it periodically, making adjustments as needed, is more likely to be fully engaged in all aspects of the operation. That level of focus is what helps the company grow faster.

A Business Plan Helps with Goal-Setting

Taking a deep dive into business planning is a great way to set goals for the company. To be effective, they need to be SMART: Specific, Measurable, Achievable, Relevant, and Time-based. Working on a business plan and related financial statements gives small business owners the chance to review what’s working and what isn’t and make changes accordingly. Setting goals and milestones for business success doesn’t just help keep the company on track; it also lets employees know when milestones are reached. Then it’s time to celebrate!

Adams Accounting Solutions Focuses on the Needs of Small Businesses

There are several other good reasons for creating a business plan. Enlisting the advice of a CPA is invaluable when working through this process. Adams Accounting Solutions specializes in all aspects of small business accounting, including business tax preparation, payroll taxes, and internal control evaluation. We can also help with operations consulting and software support.

If you need assistance putting together a business plan, contact Adams Accounting Solutions to get the small business expertise you need. We’ll help you create a business plan that leads to success!