The truth is, a well-crafted business plan is essential for any business owner, no matter the size or stage of their business, and it can solve many other problems that arise along the business journey. So, let’s debunk some of the most common myths about business plans:

Myth 1: You only need a business plan if you’re looking for funding.

While it’s true that a business plan is a crucial document when seeking funding, it’s not the only reason to create one. A business plan provides a roadmap for your business, outlining your goals, strategies, and tactics. It can help you make informed decisions and guide you through tough times. It’s also a tool for communicating your vision and mission to potential investors, partners, employees, and customers.

A business plan is also a tool for running and growing your business. Even if you don’t intend to apply for a loan, a business plan can help you establish a clear plan of action, identify your key performance indicators, and measure your progress over time.

Myth 2: Business plans are too time-consuming and complex.

Yes, creating a business plan takes time and effort, but it doesn’t have to be overly long or complicated. A simple, concise business plan that covers the critical elements can still be effective; the key is to focus on the areas that are most important for your business and avoid unnecessary details.

Concentrate on the most critical aspects of your business, such as your target market, competitive landscape, marketing plan, and financial projections. There are many online tools and templates available to help you streamline the process and ensure that you cover all the necessary elements.

Myth 3: Business plans are irrelevant in today’s fast-paced business world.

On the contrary, a business plan is more relevant than ever, given the rapid changes and uncertainties in today’s business climate. A solid business plan allows you to be proactive and adaptable, rather than reactive. By conducting thorough market research, staying on top of emerging trends, and regularly reviewing and updating your plan, you can stay ahead of the game and seize new opportunities.

Myth 4: Business plans are only for startups.

Established businesses can also benefit from revisiting their plan regularly. As your business evolves, your goals, strategies, and financial projections may change. A business plan can help you stay on track and ensure that you have a clear path forward.

Myth 5: Business plans are only for big business ideas.

Whether you have a small or big business idea, a business plan is essential. Even if your business is already up and running, a business plan can provide a framework for growth and expansion. It can help you identify new markets, diversify your product or service offerings, and improve your bottom line.

Myth 6: A business plan is set in stone, so you can’t take advantage of opportunities.

On the contrary, a business plan should be flexible and adaptable to changing circumstances. As new opportunities arise, you can adjust your plan accordingly, but an often-overlooked benefit of the business plan is that it reminds you what is core to your business.

If you have shiny object syndrome, a business plan can help you to focus on opportunities that align with your goals, values and strengths rather than saying yes to every opportunity. This can aid in decision-making in many areas of your business so you can avoid costly detours that take you away from your mission.

Remember, your business plan is a roadmap, not a prison. It allows you to set clear goals and strategies, but it also gives you the flexibility to pivot if necessary.

Myth 7: You can set a business plan and forget it.

A business plan is not a static document; it’s a living, breathing one. Regularly reviewing and updating your business plan can help you stay on track and spot potential challenges and opportunities. Use your business plan as a tool for accountability and as a way to measure your progress over time.

Myth 8: This is my side hustle; I don’t need a business plan until later.

If anything, having a side hustle makes having a business plan even more critical. A side hustle is still a business, and it can benefit from having a roadmap for success. If you hope to ever turn your side hustle into your main focus, a business plan can help you clarify your goals, determine your target market, and establish a plan to make that dream happen.

These common myths about business plans can often hinder women entrepreneurs from creating a crucial tool for their businesses. Remember, a business plan is not static but rather a living document that should be reviewed and updated regularly as your business evolves. So don’t put off creating a business plan for your business—it’s an investment in your future success as a woman business owner!

Where to start

Remember, you don’t have to go it alone when creating your business plan. There are plenty of resources available to help guide you, and here are a few to get you started:

• Free Starting a Business Info Session: How to Write a Business Plan
• Business Plan Review Service
• How to Write an Effective Business Plan
• Information You Should Always Include, Information You Should Always Leave Out of a Business Plan
• How to Write a Business Plan to Secure a Loan Approval

The post The Truth About Business Plans: Debunking 8 Common Myths for Women Entrepreneurs appeared first on WeBC.

1. Are you eligible for the lender’s programs?

I go into high-level eligibility criteria for the main categories of business lenders in a previous post. This includes factors like your credit history, financial situation, demographic profile and the financial health and overall viability of your business. 

Most lenders have a website with the main eligibility considerations listed, but sometimes there are other criteria that are not covered, or they will need to ask you some detailed questions before they can determine your eligibility. 

It is always a good idea to reach out to potential lenders to make sure you’re eligible to apply (before you get your hopes up!)

2. How much do you need, and when can you pay it back?

Some lenders can lend more than others. If you require a small loan, or you need a financial buffer to help you when you are short on cash,  you might find that a business line of credit is a better option for you than a term loan. 

Lines of credit can be drawn down only when required and may take less time to approve. They offer flexibility because you only need to pay interest on the funds you are actually using. 

If you need a larger amount and would like to pay the loan back over a longer period of the term, a term loan might be a better option. For a term loan, you will be placed on a payment schedule for a number of years. 

WeBC offers business loans for up to 5 years, but other lenders can offer longer terms, which might be beneficial if you are purchasing a major asset. Interest rates may be variable or fixed. If the rate is variable, that means your payment could change over the life of the loan. 

3. When do you need the funds?

If you need loan funds as soon as possible, or if you need funds to cover an emergency expenditure, this may be a key factor when choosing a lender. 

At WeBC, for example, it can take up to 4-6 weeks to make a lending decision, and sometimes longer, depending on your situation. If the loan is approved, it can then take additional time for the funds to be disbursed to you. If time is an important consideration, make sure to discuss that with potential lenders. 

Also, be aware of lenders that promise they can approve anyone for a business loan quickly. These lenders may charge high-interest rates or have other unfavourable terms to make up for the risk they are taking on. 

4. Are you in a specialized industry or do you need a specific kind of loan?

Lenders may specialize in a particular industry or may have loan products that are created specifically for certain needs. There are lenders that specialize in working with farmers, manufacturing companies, e-commerce sellers, or restaurants, among countless others. 

For example, some e-commerce lenders can provide loans that are repaid based on a percentage of your sales, or an agricultural lender might accept seasonal payments due to the nature of a farm’s revenue timing. 

Because these lenders understand their industries, they have developed products tailored to the needs of their borrowers and may be more flexible on some eligibility criteria than a non-specialized lender. 

5. What stage is your business in?

If your business is just starting up, you may be limited in how much you can borrow, and from which lender. Developmental lenders such as WeBC, Futurpreneur, and Community Futures are able to provide loans to new businesses, but you will need to have a strong business plan. 

If you have an existing business, you may have some additional options, but it is often a good idea to start by approaching your current bank for a loan, as they have a history with you and may already understand your business and ability to take on debt.

6. Do you need flexibility in your repayment terms?

Is there a chance that you might want to pay back your loan early? Would you benefit from a period of interest-only payments? If so, these are important things to discuss with potential lenders. 

Some lenders (such as WeBC) can offer a period of interest-only payments, which is especially helpful if you are a new business that is still growing its revenues. Other lenders will expect payment right away. 

Some lenders can also be more flexible than others if you want to pay back your loan early. At WeBC, we do not charge any fees or penalties for early repayment, and you can make lump sum payments at any time. Other lenders may limit your ability to make extra payments or charge additional fees to do so.

7. Are interest rates and fees important factors for you?

Everyone is familiar with interest rates, but many lenders also charge additional fees on top of interest. They may charge a penalty to pay out the loan early or may charge a monthly fee or a one-time administration fee. 

Make sure you understand all of the fees associated with your lender’s products and when they will be charged. Some lenders, like WeBC, offer an interest rate range, and the final rate is determined once your loan is approved. This means that you may not know exactly what your rate will be when you apply. However, we can certainly give you an idea of what to expect. 

Generally speaking, the higher the risk for the lender, the higher the interest rate will be.

8. Would you benefit from having access to advisory, mentoring, or skills development services?

As a developmental lender, WeBC offers wrap-around support, including complimentary business advising, mentoring, and skills development sessions. If you think this kind of support would be valuable to you, make sure you ask your lender what they offer. Some lenders may offer advisory services for a fee, while some are offered as a complementary service. 

9. Do you feel comfortable working with them?

As I said off the top, when you get a business loan, you are often entering into a long-term relationship with your lender. Along the way, you may encounter both good days and less good days in your business, so it’s a good idea to feel comfortable talking to your lender. 

When you meet with your lender, you should feel comfortable asking any questions you have, even if you’re afraid they might be “stupid questions.” Do they answer your questions in a way that you understand? If your lender uses a lot of jargon and confusing language, don’t be afraid to speak up and ask for more clarification. 

If they keep using confusing language or if you start to feel pressured, that might be a sign to talk to a different lender. 

When you’re looking for a business lender, it’s important to make sure you feel comfortable with whoever you are working with, and that the loan terms and support are appropriate for you. Don’t be afraid of reaching out to different lenders, and, if you can, take your time to make your decision. Hopefully, these tips will give you something to think about as you start your business lending journey!

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