A Business plan serves as a blueprint for every business. Therefore, starting your business without one is like building a house without a clear plan or blueprint. But a business is far from static, unlike a house. A business evolves, so you can see how difficult it will be for it to operate effectively if you don’t write a business plan for it.
We often tend to make the mistake of thinking a business plan is a one-time document that we put together when starting our business and never to visit again. But this way of thinking isn’t quite right in the sense that as your business develops from the startup stage to the next stage, so does your business plan. Aside from that, there is also an ever-evolving business world where your business lives, meaning you have to continue planning to be able to survive in it.
In reality, any business will most likely have multiple business plans as its goals shift.
Here are six reasons why you should consider getting a business plan for your business operations.
To test the financial feasibility of your business idea
If you would like to determine whether your business idea is feasible, then a business plan is one of the safest ways to do so. A business plan projects your revenue streams, costs, and investment requirements, so through critical analysis, you can evaluate the financial feasibility of your business idea. If it is determined that the business idea is flawed, it can be discarded at an early stage. This will save you a great deal of time and resources.
Is your idea worth pursuing, or does it require modification? You will determine this through the market analysis or competitive analysis section of your plan.
Oftentimes, aspiring entrepreneurs see or measure their new business as one that will be groundbreaking, so they fail to take a step back to research and put together a proper business plan. Sadly, sometimes the idea may not be as feasible as they had hoped, which can result in the business failing even before it starts.
To help you gain clarity on your business concept
Starting a new business can feel like navigating a maze, especially if you have little to no experience as a business owner. Writing a business plan is a process, and that process helps you gain more insights into the business and the industry as a whole. That is why taking time to write a business plan can help bring some clarity as to the necessary steps to take in achieving your business goals.
Developing a business plan helps aspiring entrepreneurs and business owners crystallize their ideas and clearly define their business concepts. It forces aspiring business owners like yourself to think through various aspects of their venture, including the product or service, target market, competition, and value proposition.
To give your new business a chance at survival
Writing a business plan ensures you pay attention to all aspects of your new business. From financial objectives to operations to market analysis, you will have to pay detailed attention to all of them. This means that it is unlikely for you to leave any stone unturned.
This process will ensure that your business startup stage will be smooth sailing, leading to success. Your market analysis will also help you define your target audience, determine your unique selling proposition and optimum pricing strategies, and identify unique ways to present your products to your potential customers in a competitive market.
To help attract investors and secure funding
If you aren’t funding your new business idea by yourself, then your startup and operating capital might come from an angel investor or an established lending institution. Without a properly presented business plan, there is zero chance of you getting equity financing from an angel investor or debt financing from a financial lending institution such as a bank.
Established businesses also need funds to buy plants and machinery when expanding operations. In a situation where they aren’t bootstrapping, they will need to source either debt or equity financing to be able to achieve their expansion. Having an up-to-date business plan at hand can improve your chances of getting the money you need to expand.
Investors and lenders want to see some level of professionalism and confidence in the people to whom they give their money. Having a well-developed business plan with figures and facts beats word of mouth, presents you as a professional, and helps eliminate doubt.
To make internal business planning effective
Mostly, a lot of people think a business plan is only important when starting a new business or securing funds, but that is not all that a business plan is important for. As mentioned earlier, a business plan isn’t a static document, and any business could have different business plans as its objectives change.
Businesses evolve, and so do business plans. And one of the business plans that keeps changing is your internal business plan.
Ideally, every business is supposed to have an annual internal business plan that is divided into quarter plans to guide the operations of the business in achieving its goals and objectives. With an internal business plan, it is easy to review your business planning process and establish what is working and what needs to be adjusted.
To get your team aligned
A business plan serves as a roadmap for your business. It helps align all stakeholders, including employees, management, and partners, by providing a clear understanding of the company’s vision, mission, and strategic direction. Without a business plan, it becomes difficult to communicate your vision clearly to your team.
A business plan also helps you establish a shared understanding of your business’s purpose and helps everyone on your team work towards achieving the stated common objectives.
Key Takeaways – Why You Should Write A Business Plan
So do you need to write a business plan? The answer is yes. A business plan is a blueprint for your business. And as your business grows and expands, you need to update it.
Having a business plan can help determine if your business idea is worth investing your time, money, and other resources in. It will determine if you need to modify your business idea or look for another (better) one.
A well-developed business plan can help you define your target market, determine your unique selling proposition, and optimum pricing, and identify unique ways of presenting your products to your customers.
It is important to have an annual business plan for your business to guide your operations and your team to achieve your long-term goals and objectives.
