Top 5 Reasons Why It Is Important For Small Businesses To Get Business Plan Written?
Business Plan is like a “Blue Print” telling your investors how you will operate your business. You do need a business plan for your business to get funded, also it offers a step by step guide as you start your business. It acts as a guidance and directs every decision you make going forward.
What Can Go Wrong Without A Business Plan
Running out of cash before you open your doors because you haven’t anticipated your start-up costs
Missing sales projections because you don’t really know who your customers are and what they want
Losing customers because your quality or service falls short
Becoming overwhelmed by too many options because you never took the time to focus on a mission and vision for your company
Going bankrupt because you don’t have a rational business model or a plan for how to make money
Who Needs A Business Plan?
If you are embarking on a significant endeavor that’s likely to consume a significant amount of time, money, and resources, then you need a BUSINESS PLAN.
Any entrepreneur can use a business plan – so can a banker, an investor, or a venture capitalist, depending on which end of the funding chain you’re thinking of. Some people use business plans just to get a physical road map together for their business or develop a get-to-market strategy; other people want to know how much they need to sell to keep their current staff employed; still others only want to determine whether a new market is worth exploring for their product or concept.
Business plans can…
• Help you obtain investment capital
• Learn what sales benchmarks you need to reach
• Figure out how many people to hire
• Determine who your competitors are
• Find the trends that are impacting your business today
Importance Of Writing A Business Plan
A business plan can be used by an entrepreneur for a variety of objectives. It is primarily used to get funding but there can be a number of other uses too. Even small one-page business plans have importance; it gives
Clarifying the purpose and direction of your business allows you to understand what needs to be done for forward movement. Clarifying can consist of a simple description of your business and its products or services, or it can specify the exact product lines and services you’ll offer, as well as a detailed description of your ideal customer.
Businesses evolve and adapt over time, and factoring future growth and direction into the business plan can be an effective way to plan for changes in the market, growing or slowing trends, and new innovations or directions to take as the company grows.
A business plan conveys the organizational structure of your business, including titles of directors or officers and their individual duties. It also acts as a management tool that can be referred to regularly to ensure the business is on course with meeting goals, sales targets or operational milestones.
By putting statistics, facts, figures and detailed plans in writing, a new business has a better chance of attracting investors to provide the capital needed for getting started.
Reasons Why Writing A Business Plan Is Important
1. It helps you get organized
There are a number of pieces that all have to come together to make your business profitable. A business plan ensures that you won’t skip any important steps that could derail your efforts down the line. When your plan is clearly spelled out in writing, it helps you see the big picture and identify potential problems before you make blunders.
2. It helps your business to stay on track
The plan makes it easier to follow each business development step in order so you don’t miss any important elements along the way. A well-written plan provides you with a starting point and outlines a timetable that drives your activities, keeping you grounded and on track as you progress.
3. It provides you clarity of the goals you have for your business
It spells out your purpose, vision and means of operation. It also serves as your company’s resume, explaining your objectives to investors, partners, employees and vendors. A good business plan clearly states the amount of capital you need to make the company work and where the investment is coming from. It clarifies the means by which you will pay back borrowed money and how you will invest profits.
4. It prepares your business for future
Market research in the business plan should include projections based on consumer needs and your ability to fulfill those needs. A well-developed business plan also documents actions the company will follow in case the projections turn out to be too optimistic.
5. It helps you determine your financial needs and attract investors
A lot of ideas sound great on paper and even in discussions. However, simple math can make or break an idea. Before we launch any new idea, we at least create a financial model to project the ROI from several realistic scenarios. You can save a lot of time and frustration thinking through the numbers, and making sure it’s possible to hit your revenue and profit goals.
Benefits Of Having Business Plan
An opportunity to test out a new ideas to see if it holds real promise of success
A set of values that can help you steer your business through times of trouble
Benchmarks you can use to track your performance and make midcourse corrections
A clear-eyed analysis of your industry, including opportunities and threats
A portrait of your potential customers and their buying behaviors
A rundown of your major competitors and your strategies for facing them
An honest assessment of your company’s strengths and weaknesses
An explanation of your marketing strategies
An analysis of your revenues, costs, and projected profits
A résumé you can use to introduce your business to suppliers, vendors, lenders, and others
Given that valuing firms is notoriously difficult and subjective, a well-written business plan will clearly highlight the opportunity for the incoming investors, the value of it and increase the likelihood of a successful exit by the current owner.
Image source:Innovator Unit
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