Many people think that a business plan is just for big corporations or cool start-ups in need of funding. But it’s so much more than that. Join us as we discuss Freelancer or Business: Why Having (& Using) A Business Plan Is a Must.
It’s one of the most important tools you can have throughout the lifespan of your business—whether you’re a solo freelancer or planning on building an empire.
Not having this document leaves you without a clear roadmap of how you’re going to get from launch to operation, to scaling up. A lack of direction is a mistake for any entrepreneur, and in this article, we’ll explain more about why you need a business plan:
1. To Better Understand Your Business
Any venture starts as an idea, but this idea needs structure and research before it becomes a viable business.
Once you’ve written up your business plan, you’ll know exactly how to get your idea off the ground, and what direction you’ll take to grow your venture, both in the short and long term.
Your plan provides you with details of income streams, your revenue model, how you plan to structure the business in the beginning and as it grows, as well as practical details like location and how many employees you need.
You now have a road map, or a guidebook, that you can keep referring to at various stages in your business’s growth and development.
You can also add to your plan over time, incorporating new research, products or ideas as they arise.
2. To Reduce Your Risk
As you can see from point one, a major part of any business plan is looking at the feasibility of your idea. Your idea might seem like a sure thing in the concept phase, but once you do the research, it may be a little less impressive.
The cost of producing your product might be too high or you may need more employees than you can afford to hire. You may also find that other businesses are offering exactly the same product or service at a price point you cannot hope to match. These are the realities you’ll face while drawing up your plan.
Doing your research first means that you can see if your idea is worth following through on before you put too much time and money into it.
3. To Create Achievable Goals
Even a solo freelancer working on contracts for clients should have goals for their business. You may not want to grow into a company that requires partners or employees.
However, you could want to get to where you’re only working on the projects you really love, instead of taking other work to keep up with the bills.
Set these goals down in writing in your business plan and use your subsequent research for the document to work out how to reach them.
You can then break those goals down into smaller milestones to help you stay on track over time.
As you reach your goals, you can update your plan, continually tracking your progress as you go.
4. To Better Understand Your Competitors
No business operates without some kind of competition—even the most original concepts have indirect competitors.
A business plan forces you to analyse the businesses around you to see how they operate and how your idea intersects with what they’re doing. This information is invaluable.
Understanding your competition allows you to gain a competitive advantage over them. You can look at what they do well and where they’re lacking and adjust your strategy accordingly.
This process helps you to see how best to differentiate your business or offering from all the others in the marketplace.
This can be through better customer service or specialising in one particular area, but you won’t know the best route for this until you assess your competition.
Having competitors to analyse is a positive rather than a negative, as it shows there’s a market for your idea.
Thinking of each competitor as its own case study will pay off as you’ll learn a great deal about the industry or sector you’re entering. You can learn from others’ mistakes to improve your chances of success.
5. To Gain More Knowledge About Your Target Market
A business is nothing without its clients. When writing your business plan, you’ll be looking at who your target market is and what their habits are.
You’ll learn how your business idea fits into the market and how you can expect potential customers to react to your concept coming to life. This will allow you to brand your business effectively and build a marketing strategy.
6. To Create Contingency Plans
The world can change quickly. What worked for you for one month may not work the next because of circumstances entirely out of your control. Any business plan template will give you room to build on contingency plans to help you adapt quickly to changing economic times. You don’t need to flesh these out fully, but it’s a great idea to have them in writing.
Remember, a business plan isn’t a static document. You should revisit yours actively to make sure you’re on target with your goals and to determine if you want to make changes based on operational experience. You can regularly update your plan to stay in line with external circumstances.
7. To Forecast Income And Expenses
It’s really helpful to know how much capital you’ll need to get off the ground and how long it’ll be before you’re likely to become profitable. Your business plan will include all of this information in forecasts based on research.
You can determine how much capital you need to build enough of your product, purchase office or retail space, launch a website, hire employees, and buy equipment.
You can also build a list of regular or monthly expenses such as wages, rent, rates, and operational costs.
If you’re a freelancer, then the chances are your expenses will be far lower than if you’re launching a business with employees.
However, you’ll still have to outlay some money, and forecasts can find out how much this will be, and for what.
Your expenses will be pitted against how much you are going to sell your products or services for.
From this, you’ll learn exactly what sales figures you need to become profitable and if your target market can sustain this.
Now you can clearly see how all the elements in your business plan feed into one another.
8. To Build A Solid Marketing Plan
You can’t run a business—even a freelance one—without bringing in customers. And you can’t do that without a marketing plan.
Your research into your competitors and target market will give you the foundation from which to build your strategy for advertising.
You can also use your business goals to help set KPIs for your marketing efforts.
It’s important to build your strategy in phases. Look at what you can do effectively on a small budget while you’re starting out.
Start by setting a small budget, as this will help you gain traction quicker, rather than trying to do everything for free to begin with.
Then, look at what you would like to do for advertising once your operation is larger and you can allocate more financial resources to this area.
Don’t forget to include how you plan to keep customers in this section. Customer retention is as important as bringing in new customers, if not more so.
Repeat customers indicate that they’re happy with your service, and are likely to recommend you to others too, making them incredibly valuable.
9. To Secure Funding
Many businesses need to secure funding at some point or another. Start-up capital will help build a business that has large upfront costs.
A fast commercial loan can help you grow from a small to a medium-sized enterprise. A line of credit assists you in navigating tough economic times and keeps you afloat until you can adapt.
To secure any of this funding, you need a proper business plan. Investors and traditional lenders want to see that you’ve thought about your concept, done your due diligence, and are serious about your business.
They’ll base their decision of whether or not to give you funding, and how much to give you, on your research and the figures you’ve provided and quantified.
10. To Prove Your Business Is Serious
Investors or lenders are not the only people who should see that you’re serious about your business. Sometimes, you might need a little reminder about why you’ve started down this path.
The creation process of a business plan will make you sit down and really think about what your concept is, why it’s worth pursuing, and how passionate you are about it.
You’ll likely find that going through the process helps you to solidify your intentions. You’ll have facts and research to back up your assumptions and forecasts.
You’ll find new avenues to expand into or take your business along. Plus, it’ll give you the confidence to proceed with your idea and build a business that’s yours.
Your business plan gives you an in-depth understanding of what you want to do, how you want your venture to function, the competition you’ll face, and what your growth strategies are.
You get the opportunity to answer questions upfront and get to grips with what it is you’re truly trying to achieve—and how.
When starting a business, there are no better reasons to put pen to paper than these. Now, what are you waiting for?
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