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Should you Create an Annual Business Plan? Here are the Benefits

Publish Date: 08 Dec 2020

We have recently written a few articles regarding business plans and in my opinion, this could be one of the most important ones. This is because not many people know that a business plan, once it has been used for financing, should be used by you as a guide to all the aspects of your business. Here is why you should create a business plan annually.

Yes, any business should at least review their business plan annually, some businesses should even do it monthly when starting out. It is mainly to check you are on the right track, it also helps motivate yourself and employees to reach new goals. Remember, a business plan is never final.

The benefits of creating an annual business plan are well worth the time it takes you to create one. Remember, you will mostly just be reviewing one of your old business plans, adding to it, and maybe creating new sections with new goals and data about your business. Anyway, in this article, we are going to discuss why you need to create an annual plan and what the benefits are.

The 5 Benefits Of Creating An Annual Business Plan

Creating a business plan doesn't stop the minute you have secured funding or when you start achieving your goals. A good businessman will create an annual business plan and they will constantly use both as a comparison.

In this section, we are going to talk about the 5 benefits of creating a business plan every year.

#1. Keep Track Of The Progress Of Your Business

When you create a new business plan for the year, you can use it to compare it to your previous business plan all the way to your first one and this helps you keep track of just about everything. It also can act as an indication as to whether or not you are achieving your goals.

It also helps you to stay on point and on track with what you need to do in order to hit certain targets that you may have set for your business.

#2. Update Your Goals

In this section, we are going to talk about what we mean when we say you should use an annual business plan to update your goals. We are not just talking about updating the status of existing goals. For a better understanding of this, keep reading.

Creating an annual business plan might help you come up with new ideas and new goals. This is a great way to achieve new heights with your business. You might also find that some of the goals that you set in your previous business plan but did not accomplish are no longer necessary and if you keep trying to achieve those goals you could be wasting valuable time.

Being able to do this is going to give you a better understanding of where you are headed in terms of the success of your business.

#3. Rethink Strategies That Can Perform Better

This is something that is related to your goals. Your strategies are the ways in which you plan on achieving your goals or achieving certain targets that you set for yourself.

It is a sad truth that most businesses fail and for those that are successful, there are a lot of strategies that do not go as planned. In order to keep your business running smoothly and for it to be a success, you need to be able to identify what strategies are working and which are not.

Once you identify which strategies have not worked out for you, the best thing you can do is to rethink them before completely scratching them off your business plan. Without a good strategy, a lot of goals and targets might seem harder than they actually are.

Use your new business plan to highlight your new strategies so that they are easier to keep track of and so that you can stay on target throughout each year.

#4. Keep You And Your Employees Motivated

If you are a small, one-man business, then keeping yourself motivated should be easy. What is difficult in terms of motivation, is motivating your employees. This is something that requires certain leadership skills. However, you can make your life a little bit easier with a few simple tricks.

Creating an annual business plan will allow you to set out new objectives and new strategies on how to achieve those objectives. That alone is enough to keep most people motivated but you can also use it to motivate your employees.

If your employees see that you are motivated and they can see that you know what you are doing, also, if they can see that you know what you want to achieve, this is what it will do. It will make them want to grow with you because at the end of the day, as an employer, when you grow so do your employees.

Motivated staff, along with motivated bosses, can do a lot for a business. Not only does it increase productivity but it also makes the workplace a better place to be.

#5. Show Lenders That You Understand What You Need To Do Every Year

I normally try and stay away from all the generic answers that are easy to find everywhere. However, when I do have to give one of those answers, I will always try and elaborate more on the topic. This is so that we can all get a better understanding of why certain things are the way they are. 

When you create an annual business plan it is best to keep copies of all your previous business plans dating back to your first one. Now when you seek finance from a financial institution, along with all your documents and your books, you can submit your most recent business plan and attach all your previous ones.

The reason why you want to do this is to show the lender that you are keeping track of your business. You also show that you know what you need to do to carry on with the success of the business. You also want to show the lender that you are achieving what you set out to achieve when you started the business.

Finally, it is important to remember that any financial institution that is going to invest in your business is not just investing in the business they are also investing in you. Drawing up an annual business plan will give them a good indication as to who you are along with what your business is busy achieving.

A Business plan Is Never Final: It Should Stay Updated

I did briefly touch on this at the beginning of this article but I want to elaborate on it a little bit more.

A business plan should be seen as more of a guide and something that is used to keep track of all aspects of your business. Things change really quickly and you need to keep these updated. That is the most important reason why a business plan is never final.

Goals, plans, new ideas, they should all be logged in the business plan to review on an annual basis. A successful business is one that evolves to fit the surrounding market.

Conclusion

That brings us to the end of this article and while at times we tend to go a little bit too in-depth with certain topics, our main goal is to make sure that you have all the right information. The goal of this information is to help you run your business as efficiently as you possibly can especially if you have just recently started your business or are looking to start one.

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