Whether you are planning to start a new senior care business or expand your existing one, your first step is to develop a strong business plan. Why? Because the business plan is your blueprint for creating profitability and success. You wouldn’t build a house without a blueprint to follow and the same goes for your business! It’s important to note that you should not outsource the research or writing of your business plan. As the business owner, only you have the full vision.
Here are five important ways a business plan can help you succeed with your start up or expansion.
- Establishes the viability of your project.
A well-constructed business plan requires you to think through and document a range of logistical requirements for your project in order to establish its viability and interpret its likelihood of success. Your business plan should answer certain market-related questions such as:
- What is the location of your senior care business and what are the demographics of the area?
- What competition do you face in your market? How will you differentiate?
- How do you define your target market and how will you price your services?
- How do you plan to market your business?
- Who’s your management team? How will you recruit and retain talent?
- How much money do you need to complete your development or expansion and then ramp up operations?
- What are the projected monthly income and expenditures and census or customer caseload figures upon completion of your project?
- How will you measure success?
By carefully researching and documenting the answers to these questions in your business plan, you gain an understanding of the true potential of your company and can initiate your project with greater confidence.
- Provides a basis for negotiating with lenders.
You will need to borrow a significant amount of capital in order to execute your plan to develop, acquire, or expand. The business plan forms the basis for negotiations with potential lenders or investors. It details your business objectives, market research, and plans for staffing, marketing, and cash flow management. A thorough plan provides a foundation for determining the potential value of your business and will help identify and quantify the risks that your lender would be undertaking by funding your project.
When choosing your lender, look for a lending institution that is knowledgeable about the senior care industry, as they are more likely to understand your specific situation and financial needs. An experienced lender who specializes in senior care should also be able to spot potential flaws in your plan and project calculations, possibly saving you valuable time and money.
- Creates a guideline for cash flow management.
The business plan is a living document that should be updated periodically to reflect changes in the company vision, economic challenges, competition and cash flow projections. A business plan also serves as a guideline for cash flow management. Understanding the cash flow of your business allows you to manage cyclicality and respond more effectively to market trends and opportunities. You are also better positioned to plan your next stages of growth.
- Functions as a business communications tool.
Often, business owners discover that they need to effectively communicate the mission and expectations of their company to customers, suppliers, attorneys, regulators, and other third parties. The business plan, partially or in whole, provides a thorough overview of your company’s vision for its future. Components of the plan can be valuable tools for communicating a broad view of the company to employees, educating key strategic partners and referral sources about the scope of the business, and informing financial supporters of your specific plans for future success.
- Empowers you to determine your future.
Whether your objective is to run a small business or become a large scale industry leader, the best way to control the outcome of your business venture is to plan for it. By documenting your ideas and strategies–what you want to see happen and how you plan to get there–you are building a roadmap for yourself and taking control of your own future.
These are just a few of the most important reasons for creating a business plan. You might also consider the benefits your business plan can provide in outlining specific objectives for your management team, influencing key investment decisions such as whether to lease, buy, or build, valuing your business for estate planning and tax purposes, or defining your personal exit strategy. Developing a thoughtful business plan can help you focus your vision for the future and positively impact your level of success.