A written business plan serves more functions than just arranging finance, dealing with suppliers and vendors and familiarising the prospective employees about the business. A written business plan as a management tool acts as a roadmap for one’s business. It helps the promoter to chronologically organise important business events so that the promoter does not forget any business preconditions before taking critical business decisions. Benefits of a Business Plan as Management Tool Business Plan as management tool provides two benefits in the management of one’ business: It helps the promoter to plan for the future: a business plan helps the promoter to identify those critical events which have the potential to occur in the business journey and the consequent actions that must be taken in order to keep the business up and running. In a way, business plan as management tool serves a timetable for the business venture and helps in setting goals and deadlines.Takes into account the internal and external factors that may affect the operations of the business: there a number of factors that may or may not be within the control of the business but which can affect the business to a great deal such as economic conditions, competitors, technology, weather conditions etc. A written business plan keeps a tab on the possibility of happening of such events, factors in the adversities and plans accordingly to deal with them in the future if they happen. Important Elements of Business Plan Business plan as management tool must have the following two elements and their milestones must be met for the business to sail through: Marketing strategy: one of the essentials of a good business plan is to have a great marketing strategy which begins with identification of the target audience and how the product will be positioned in the market to reach that audience. The targeting advertising and promotional activities are linked to the sales targets. Operational Plans: The operational plans of a business helps in conducting day to day activities of the business. Consideration is also given to the cash flow projections of a business. The cash flow projections will determine whether the business will be able to fulfil the obligations towards the vendors and others who provide goods and services to the business. All the cash projections of a business are directly tied to the operational results of the business. For example, the income from the projected sales of the month will help in meeting the expenses of the following month. Most of the businesses are cyclical in nature and a business plan as management tool helps in accounting such period of boom and bust in the business. Important Aspects of Business Plan as Management Tool Helps in tracking Operations: A well written business plan helps in tracking progress of the operations. Apart from tracking the operations, a business plan helps in identifying the milestones that can used to measure the progress. These milestones can be in the form of a checklist items such as obtaining insurance, acquiring a facility and it also can be in the form of operational results of the business. A benefit with a written business plan is that it provides a real time feedback regarding the operations of the business operations and provides the promoter an opportunity to take corrective measures. Helps in adjustment of operations: For any business to be successful, it should know when and how to make adjustments in the operations. For example, the plan projects to achieve a certain target by the end of a quarter and if the business has been able to achieve only half of the targets before the closing of the quarter, then a written business plan as management tool can be effective to make adjustments in the approach. A written business plan helps the business owner to know when to make such adjustments. An important feature of a good business plan is that it has definitive time bound targets to be achieved which almost depicts like a timetable. A common practice adopted by some of the most successful business plans is that their plans are quantifiable i.e. the business success depends on achieving of a certain quantifiable or objective target such as reaching sales to a particular target or selling a particular quantity of products during a given financial year. If a business does not have a written plan and it waits for the whole year to track the progress then such business will not have enough time to make the necessary changes to achieve the target. On the other hand, where a business has a quantifiable written business plan, then he will be able to track the actual performance on real time basis and accordingly make changes in the strategy to achieve the desired target. Business plan as management tool to present credentials of business promoter: A well drafted written business plan is a business equivalent of an individual’s resume. It depicts the business owner’s qualifications, experience and his ability to carry forward the operations in an economically feasible manner. It addresses all the business related issues that a business might face in the future and how it will deal with them. An ideal business plan provides the audience a positive image of what the business is and what can be expected from it. Conclusion A well written business plan as management tool depicts the fundamentals of a business and is a reflection of how it is perceived by the other stakeholders in the business. The suppliers and vendors will be interested to give discounts or defer payments if they believe in the strong fundamentals of the business. Similar is the case with the lenders who would be willing to extend loan to the business if they believe that the business will be able to repay. Further, the employees will continue with the business if they believe that the business has a bright future. All this is reflected from the written business plan. Read Our Article: Why a Business Plan is Considered as a First Step of Business?