Does a Small Business Need a Business Plan?

When you first started your business (or are thinking about starting one), you may have considered whether a business plan matters. 

Business plans are for ‘big businesses’, right? It’s something that they talk about in board rooms in suits and big presentations. Well, no, it’s not. The misconceptions around business plans can come back to haunt small business owners. Opportunity and money wasted (and a lot of stress).

A business plan is the foundation upon which successful businesses are built. It serves as a roadmap, guiding you through the challenges of starting and growing your business. At its core, a business plan is about strategy.

So when you ask a Bookkeeper/Accountant like me whether a business plan matters, our answer will be a resounding yes, and here’s why.

The Role of Strategy in Business Success

First, you need to understand what a strategy is. Strategy is about guiding your decisions. Let’s use the example of a road trip. Before you set off, you must think about where you want to go and which route to take and how long do you want to travel for. You will need to know your mode of transport and what you need during the drive, such as fuel, snacks, water, and toilet breaks. It's just doesn't make sense to not think about any of that before leaving the house.

A business plan helps you identify where you want to go and outlines the steps needed to get there. It’s not just about dreaming big; it’s about making those dreams a reality through careful planning and execution. It will keep you focused and help you make informed decisions. It allows you to allocate resources effectively, prioritise tasks, and set measurable objectives. Without a plan, it’s easy to get lost in the day-to-day operations and lose sight of the bigger picture. A business plan keeps you grounded, ensuring that every decision aligns with your long-term goals.

Know Your Numbers

While strategy is crucial, it’s only one part of the equation. The other equally important aspect is knowing your numbers. Understanding your finances is the key to sustaining and growing your business. A business plan forces you to delve into the financial side of your business, from cash flow to profit margins. It’s not enough to have a great product or service; you need to know if your business is financially viable.

Many businesses fail not because of a lack of customers or a poor product, but because of financial mismanagement. Without a clear understanding of your finances, you’re operating in the dark, making decisions based on guesswork rather than data. A business plan helps you anticipate financial challenges and plan for them, whether it’s securing funding, managing expenses, or scaling your operations.

A Business Plan is More Than a Document—It’s a Roadmap for Success

It helps you develop a clear strategy, understand your finances, and anticipate challenges. But to truly benefit from your business plan, you need visibility into your financial health. This is why professional help, particularly from a skilled bookkeeper/accountant like ourselves, is essential. With a business plan and the right financial support, your business is not just more likely to survive—it’s more likely to thrive.

Wordy Words

Strategy: A roadmap for your business 

Goal: The things you want to achieve 

Objective: A clear and measurable task within your goals

Profit: The difference between what your business makes and the expenses it pays out

Profit Margins: The amount of profit in each sale

Book a discovery call with us to see how we can support you in better understaning your business and it's finances.