Skipping a business plan can actually bring financial consequences. It can bring your business down and cost you resources, which will make it harder to succeed and forcing you to spend valuable time regrouping your efforts and repairing the damage.
Of course, running a business without a strategic plan will also cost you frustration and stress and will inhibit you from reaching your fullest potential.
But, as a business coach I’ve spent time with all kinds of leaders and businesses, and know that some of the biggest consequences of forgoing a business plan are financial.
Lack of Direction with Resources
If you don’t have a solid business strategy, you don’t have an efficient plan for using your resources. You may spend money on things like software, office space, supplies and even employee salaries without a clear purpose, which often means those resources are wasted because you aren’t using them to their fullest potential.
What’s more is if you don’t have a plan, you won’t know what kinds of resources you need, causing you to throw money at business obstacles without finding a real solution.
Wasted Time Spent Drifting
Time is money. When you don’t have a plan your time isn’t as lucrative as it could be because you will spend much of it “drifting.” In other words, your team members won’t have clear direction, you won’t know which opportunities to spend your time on and your entire business will suffer because you efforts aren’t coordinated or purposeful.
One of the biggest reasons to create a business plan is to give yourself, and your team, direction. A good plan will have goals and step-by-step plans for achieving them.
Time Spent on the Wrong Path
I’ve worked with a lot of good leaders who know how to lead teams of people, but who have found themselves on the wrong path. Instead of drifting, they do the opposite. They pick a direction, without doing much research or without having a plan in place, and then spend too much time pursuing something that doesn’t bring a return.
Unfortunately, without a business plan it’s hard to know where your efforts should be spent. But with a plan, you’ve defined each person’s role in a way that will make the entire team successful.
Missed Opportunities for Growth
Without a plan, you will be so distracted trying to figure things out as they come that you won’t see valuable opportunities for growth. You won’t have the resources, time or focus to find ways your business can grow and become even more lucrative.
This can bring major financial consequences because you will spend time spinning your wheels and using resources inefficiently, trying to solve problems while never pulling ahead or reaching higher levels of success.
Inability to Cover Overhead Expenses
All businesses have overhead expenses. In some cases, these may be very minimal, if you’re starting a home-based business for example. But if you are running a small business or if your startup is growing and demanding more resources, you’ll find overhead expenses are a major part of your financial planning.
A good plan will help you prepare to cover these expenses by outlining exactly what resources you will need to be successful and how you will financially prepare to pay for them.
Failing to Turn a Profit
Finally, and perhaps most importantly, your chances of turning a profit are slim when you don’t have a business plan. Without clear direction, plans to overcome potential challenges, delegated tasks and a list of necessary resources and how they will be used, your business will lack organization, which translates into financial problems.
On the other hand, with a strong plan you will be prepared to steadily increase your profit, making your business more financially stable and paving the way for growth and more opportunities.
I help businesses in all kinds of industries create business plans that are designed to bring both organizational and financial success. If you would like some one-on-one help creating a business plan, or improving the one you already have, contact me.