Harvey: Welcome back to the GPT podcast.com and today we continue with our Entrepreneur Series, part four of the Top 10 Entrepreneurship topics. I'm Harvey, and I'm joined by my co-host, Brooks. Today, we are going to talk about the importance of a business plan for entrepreneurs.
Brooks: Yes, Harvey, I am looking forward to this topic. As an entrepreneur myself, I know the importance of having a clear roadmap for my business.
Harvey: Sure, Brooks. A business plan for entrepreneurs is a document that outlines the objectives and goals of a business. It details how the business will achieve its goals, including sales, marketing, and product development. It also may include financial projections, potential challenges, and ways to mitigate them.
Brooks: I see. Why is it important for entrepreneurs to have a business plan?
Harvey: There are many reasons, Brooks. Here are some of them. A business plan puts a plan in place when starting a new business. It helps to conduct necessary research before starting a business. It evaluates competitors and identifies the target audience. It sets objectives for employees and managers. It sets clear goals for entrepreneurs. It determines when new employees are needed. It assists in making important business decisions. It helps to know when to sell your business. It determines how you will find funding. It helps to predict when/how you will profit. It helps to predict potential problems. It provides a valuation for the business. It can help to share your business plans with coworkers and family. It provides guidance during difficult situations.
Brooks: Those are all great points, Harvey. Can you explain how a business plan sets objectives for employees and managers?
Harvey: Yes, Brooks. A business plan sets specific goals and tasks for the business. This helps to ensure that employees and managers are clear on their duties. It also helps to choose the right staff for the business by setting clear expectations and objectives. A business plan sets the expectations of the business from the beginning, so if you change or update your goals, a business plan can help share these new objectives, providing structure and accountability.
Brooks: That makes sense. How does a business plan help to determine when new employees are needed?
Harvey: As you expand your business and increase your revenue, you will need additional employees to assist with the daily tasks. But, hiring people before you're ready to expand can reduce your profits. A business plan can help you evaluate the right time to bring on additional staff. It can also help with setting clear duties and expectations for each position. You can also use your plan to determine what skills to look for when hiring.
Brooks: I see. How does a business plan help to predict problems?
Harvey: A business plan can help you predict potential problems, like slow seasons or changing customer trends or habits. You may be able to prepare and overcome these challenges ahead of time with a business plan. It can also help you to identify potential weaknesses in your business model or strategy.
Brooks: That's very insightful, Harvey. Can you explain how a business plan provides a valuation for the business?
Harvey: Placing value on a small business can be difficult, but it is sometimes necessary. Whether you want to include it in your estate, list it for sale, or you need a value for taxes, a business plan can be a valuable resource. Providing your business plan to an accountant can also help them calculate an accurate value for your business.
Brooks: That's a great tip, Harvey. How does a business plan help to provide guidance during difficult situations?
Harvey: A business plan can help you to navigate difficult situations by providing a roadmap to follow. It can also help you to make informed decisions by outlining potential risks and strategies to mitigate them. 
Brooks: That makes sense, Harvey. So, how does a business plan help in the research process?
Harvey: Good question, Brooks. Writing a business plan requires conducting necessary research, which can be helpful in deciding if starting a business makes sense. By writing out the details and finances of the new plan, you can determine if a shift will be profitable. This includes defining your market, pinpointing who your customers are, and how you will reach them.
Brooks: I understand, Harvey. So, a business plan can help in evaluating competitors and finding your audience. What else can it do?
Harvey: Another part of creating a business plan is researching the current companies in the industry in which you want to work. By identifying competitors and where they are not currently reaching customers, you can better predict how you will reach them. It can also help you choose your target audience.
Brooks: Wow, Harvey. It seems that a business plan can do a lot for an entrepreneur. Can it help in setting objectives for employees and managers?
Harvey: Absolutely, Brooks. Setting and measuring objectives will ensure that employees and managers are clear on their duties. This can also help you choose the right staff for your business by setting clear expectations and objectives.
Brooks: That's a great point, Harvey. Can a business plan set goals for an entrepreneur?
Harvey: Yes, Brooks. Setting clear goals is helpful for you as an entrepreneur. You can use a business plan to list specific goals that you want to achieve along with target dates. This can provide you with a guide to structure your daily responsibilities, while also providing you with accountability as an entrepreneur.
Brooks: I see, Harvey. Can a business plan help determine when new employees are needed?
Harvey: Yes, Brooks. As you expand your business and increase your revenue, you will need additional employees to assist with the daily tasks. But, hiring people before you're ready to expand can reduce your profits.
Harvey: Now let's dive into our next set of facts, Brooks. As an entrepreneur, you may have to deal with things like employee conflict or even legal difficulties. But a clear business plan can help you deal with these issues, identifying the purpose of your business and what you hope to achieve.
Brooks: That sounds really useful. Can you explain how having a business plan can help entrepreneurs create an effective marketing strategy?
Harvey: Of course, Brooks. Once you have a business, you will need to reach customers through marketing. A business plan can help you pinpoint not only who your customers are, but also the best way to reach them. By setting clear goals for the business, you can maximize your marketing budget and increase your revenue.
Brooks: It's interesting how much having a plan in place can affect the success of a business. Can you elaborate on how having a business plan can help entrepreneurs manage cash flow?
Harvey: Sure. Once profits begin coming in, you will need to decide how to spend them. Listing your cash flow plans in your business plan can make this decision easier. You may use profits to take a salary, reinvest in the business, or find new products or services to sell. It's all about making informed decisions based on your business goals.
Brooks: That makes sense. So, can a business plan also help entrepreneurs determine the success of their business?
Harvey: Absolutely, Brooks. A business plan sets clear goals, which can help you measure success. You can use key performance indicators to know how to measure your progress toward your goals. You can use this information to determine what areas of the business are doing well, versus which areas need improvement. This way, you can also identify the need for new goals or plans.
Brooks: It's amazing how many benefits a business plan can have. But what about entrepreneurs who don't think business plans are necessary?
Harvey: That's a good point, Brooks. While many argue that business plans are no longer needed to start up a company, the exercise of trying to foresee the future five years from now can be extremely helpful for entrepreneurs. In fact, research published in the International Small Business Journal demonstrates that engaging in planning activities is associated with better chances of success and greater accuracy.
Brooks: That's fascinating. Can you provide any pointers on how entrepreneurs can get the most out of planning?
Harvey: Sure thing, Brooks. It's important to take a wider view of planning and see it as an opportunity to generate new information and insights into your business. It can also help challenge and change your own views and biases, not only of your prospective business but also of your own skills and competence. Furthermore, it's essential to allow proper time to plan, as planning activities over a period of 12 months led to significant changes in perceptions in three areas: perceived uncertainty in the business environment, self-efficacy, and expectations of financial performance.
Brooks: Wow, there's so much to consider when it comes to business planning. It sounds like it's worth investing time and energy into it.
Harvey: Absolutely, Brooks. Even experienced entrepreneurs can learn and change their beliefs through planning activities. And don't forget, teaming up with others can also be beneficial, as entrepreneurs who were part of larger teams saw more positive results, perhaps due to their pooled knowledge and experiences.
Brooks: This has been a really informative discussion, Harvey. Thank you for sharing all of these facts about the importance of a business plan for entrepreneurs.
Harvey: It was my pleasure, Brooks. And thank you for your insightful questions. That's all for today's episode of the G P T podcast.com Entrepreneur Series. Join us next time for more insights and tips on entrepreneurship.