Many Entrepreneurs start a business without making a business plan because they think they know how business works, then why should I need a business plan. Suppose you want to build a house would you just walk down and start constructing your house, obviously no. You would hire an architect who can convert your imagination to real life; he will give you a proper blueprint and a complete idea of how your house will look like. Just like that if you are thinking to start a business or grow it you need a business plan, it provides you a roadmap that helps to achieve your goal. A business plan’s purpose is not only to receive capital from investors but it also gives direction to your business, defines your goals, prepares strategies to achieve growth and helps you to handle bumps in the road.
A business plan is not a single document that you just write out on a single page and then set aside. Something to check off the to-do list and be done with but in actual it’s a living guide and on time to time basis is reviewed and revised based on the circumstances changes to keep it on the right track.
There are so many good reasons to create a business plan that many business owners don’t know about it. To start a business or to grow your business and be more competitive in your industry you need a business plan. We’ve laid out five key reasons why you need to get started on your business plan today:
1. To test the Feasibility of Your Business Idea.
A well-researched business plan will help you to find whether or not an idea for starting a business is feasible or not, other than to put in operation. In this sense, the business plan is your safety net; writing it can save you a great deal of time and money if working through the plan reveals that your business idea is irrational. Often, an idea for starting a business is discarded at the marketing analysis or competitive analysis stage, freeing you to move on to a new (and better) idea.
2. To give your business the best possible chance of success.
Before writing a business plan for your startup you need to have all your numbers in order, especially if you’re planning on securing investment funding. Figure out exactly how much money you need to start the business and stay operational; otherwise, you’ll run out of money. Running out of cash is one of the most common reasons why startups fail. The exercise of budgeting and market planning will help you define your Target Market, your Unique Selling Proposition, optimum pricing strategies, and outline how you intend to sell/deliver your products to customers.
3. A business plan is vital to helping you get finance
If you want to raise capital for your business, you will need to influence the mind of investors or financers by making fruitful business plan, they will look at your past financial performance and future financial forecasting, background, and experience in the industry, uniqueness of your product and service, business model and market size of your product or service. Lenders and investors will only risk their time and money if they’re confident that your business will be successful and profitable.
4. You’ll spot problems ahead of time.
Would you rather uncover problems with your business concept during the planning stage or wait until you’ve already spent money on a location, inventory or employees? By identifying possible obstacles, your business plan will help you plan how to avoid them.
5. It will help you to reach your business milestone.
A plan is useless without some concrete steps to make it happen. You must develop milestones measurable achievements that will tell you whether your business is progressing in the way you planned for it too. Develop these milestones by examining the peak points in your business plan that you must reach before you can pursue the rest of the plan.
Nothing can absolutely prevent your business from failing, but it turns out that having a business plan can help reduce your risks. It does not guarantee success, unfortunately. But, those companies with a plan had better chances of success than those that skipped the planning process.