It’s an ongoing debate…
Some view business planning as essential, whereas others think it’s optional.
And some situations may or may not require a business plan.
Small, low-risk startups where the business owner has lots of experience or has started a business before.
And there are Nurse Practitioners who “fall” into their practice.
- They work with another provider ready to retire, so they take over the business.
- Or they “inherit” the practice because the owner has passed away.
- Other times, they stay in the practice when their business partner is ready to move on.
In most cases, these practices are well-established and run smoothly.
Do you need a business plan in cases like that?
Probably not… unless you plan on making sweeping changes, like buying a building, expanding the practice, or adding services that require significant investment.
The New Business
But business planning is generally recommended for all new businesses. However, the business plan’s depth, detail, and format will vary depending on the type of business, its size, and its goals.
Here are a few reasons why writing a business plan is advisable for new businesses and practices.
- The business plan is your blueprint, your roadmap for starting and running the business/practice.
- It helps you identify the target market by conducting market research and ensures that the planned services will meet the needs of patients.
- Writing a business plan helps you identify your competitors and helps to determine how you can differentiate and set yourself apart.
- A plan helps you estimate your startup costs, breakeven point and projected revenue and expenses. The financial portion of the plan will tell you if your practice is viable or if you need to go back to the drawing board.
- Your plan helps you estimate your opportunity cost… what you’re giving up by starting your own practice.
- A business plan lets you calculate potential risks and challenges and helps you identify solutions.
But not all business plans are created equal…
And depending on the size and the needs of the business or practice, some may benefit from a traditional, formal business plan, whereas others may do fine with a more informal document.
What’s important here is the process of thinking about goals and objectives for the new business and how to accomplish them.
Naturally, that process doesn’t stop once the practice is established but is ongoing.
The Established Business
And that’s why established businesses continue to update and sometimes rewrite their business plans.
Here are some of the specific benefits to existing businesses of keeping their plans up to date:
- Planning: business planning is critical for the management and operations of the business. It helps businesses focus on goals and objectives so they can maximize their current resources. And, for new and established businesses alike, a good plan is a roadmap that guides every aspect of business operations, from employees to finances to marketing and much more.
- Change: the business plan, if up to date, helps the business adapt to changes since all business environments are dynamic and ever-changing. A business plan allows the company to adapt to change, identify opportunities, anticipate potential problems, and develop strategies to solve them. For example, a practice might be able to respond quicker to new Medicare rules since potential threats were identified earlier through the business planning process.
- Finances: business planning is critical for budgeting and financial management. It allows businesses to forecast their financial performance and make the necessary adjustments to maintain sound financial health. An example may be a practice ready to expand by adding additional providers and support staff. With an up-to-date plan, it will be easier to determine if the expansion is feasible and is a good decision.
- Risk: through business planning, businesses can identify potential risks and develop contingency plans to mitigate these risks, thereby minimizing potential damage to the business.
- Growth: business plans help businesses identify growth opportunities. They provide a framework to evaluate the potential benefits and risks of expanding the business, adding new services to the current offering, and other potential opportunities for growth.
- Communication: a business plan is a tool for better communication. It allows the business to share its vision, mission, and goals with business partners, employees, and other stakeholders. For example, if a practice brings in other providers, they can be handed the business plan for review and discussion about the business specifics.
- Funding: at various times, established businesses need to secure funding, perhaps to expand the business, purchase a building, or invest in technology or other equipment. Here, lenders will look to the business plan to determine the viability of the company’s goals and strategies.
How often should business plans be updated to stay relevant and useful?
The frequency of updating a plan depends on various factors, including the nature of the business, the rate of change in the business environment, and the specific needs and goals of the company.
Here are some general guidelines:
- Annually: at a minimum, a business plan should be reviewed and updated at least once a year. This helps to align the business goals and objectives with any changes in the market or industry, regulatory environment, competition, and internal circumstances.
- Quarterly: A quarterly review might be more appropriate and beneficial for businesses in highly dynamic and rapidly changing industries, such as technology. Frequent reviews allow the business to adapt faster to new opportunities and challenges.
- When significant changes occur: business plans should be reviewed and updated when significant changes occur. For example, when the business changes its strategic direction, introduces new products or services, acquires substantial assets, or a significant change occurs in the market or industry impacting the business.
Remember that business plans are not static.
But they are meant to be living, breathing documents that guide decision-making and strategy. They should be updated as often as necessary to reflect the business’s current realities and aspirations.
Regularly updating your business plan ensures that your business remains responsive to changing conditions and that your strategies remain aligned with your goals and current market events.
As you can see, business plans for established businesses aren’t much different from those for new companies or start-ups.
And that’s why I say business planning isn’t just for startups!
While business plans may not always be necessary, they benefit all businesses. They are powerful tools to help companies navigate their day-to-day operations as much as their long-term strategic direction.
They help businesses tackle challenges and allow them to seize opportunities so they can thrive in a competitive environment.
Let us know what you think about the merits of business planning; just leave your comment below.