You would never start a long journey without first mapping out where you are going and what route to take to get you to your destination. Starting a business without a business plan is just as foolish. The business plan serves as the map for the entrepreneur! Writing a business plan is essential if you want to have a successful business that’s going to survive the startup phase. The process of writing a business plan can do wonders to clarify where you’ve been and where you’re going. If your business doesn’t have one, maybe it’s time to start working on one.
Just like the map for your long journey, your business plan is a static plan. If there are road detours on your trip you will need to change your route. The business plan for any business will also change over time as the business develops or unexpected events occur. In fact, many businesses may prepare multiple business plans as its objectives change or the unexpected forces you to alter your course.
The business plan is the blueprint for your business.
Here are some good reasons why you should write a business plan:
It is better to determine the feasibility of your idea or business model by going through the process of preparing a business plan, rather than throwing good money into uncharted ideas. In this sense, the business plan is your safety net; writing a business plan can save you a great deal of time and money if working through the business plan reveals that your business idea is untenable. Often, an idea for starting a business is discarded at an early stage of the plan freeing you to move on to a better idea.
Writing a business plan will ensure that you pay attention to both the broad operational and financial objectives of your new business and the details, such as budgeting and market planning. Taking the time to work through the process of writing a business plan will make for a smoother startup period and fewer unforeseen problems as your business becomes established.
A business plan is essential if you’re thinking of starting a business, but it’s also an important tool for established businesses. Viable businesses are dynamic; they change and grow. The company’s original business plan needs to be revised as new goals are set. Reviewing the business plan can also help you see what goals have been accomplished, what changes need to be made, or what new directions your company’s growth should take.
Both startups and established businesses often need money. It is rare to see an entrepreneur start a business with sufficient capital out of his/her own pocket. The person will need to seek loans or investments from friends, family, private investors or banks. Having a well thought out, concrete business plan will help you convince others that your idea is worthy of their hard earned money. Even at later stages in the business one may need moneys to do things such as buy new equipment or property, or because of market downturns. Having a business plan gives you a much better chance of getting the money you need to keep operating or to expand. You’re going to need both operating and startup capital to start a new business and you have no hope of getting any money from established financial institutions such as banks without a well developed business plan.
Whether you want to shop your business to venture capitalists, or attract angel investors, you need to have a solid business plan. A presentation may pique their interest, but they’ll need a well-written document they can take away and study before they’ll be prepared to make any investment commitment.
Be prepared for your business plan to be scrutinized; both venture capitalists and angel investors will want to conduct extensive background checks and competitive analysis to be certain that what’s written in your business plan is indeed the case.