Six Reasons Why You Need a Business Plan
By Mark Evans
If you’re embarking on a startup or a new expansion or just want to assess your current business, the powers that be always suggest you write a business plan.
But in today’s fast moving climate, it seems so old school. Does anyone use these things anymore?
Turns out they do. And for good reason. Here are some good reasons:
Test your assumptions: A great business idea is often grounded in a set of assumptions about clients, costs, the business climate and other factors. A detailed business plan forces you to face each of these assumptions and recognize if, in fact, customers will buy your product or if the math works.
Take the emotion out of it: Further to the same idea, business ideas are often hatched out of passion for an idea or a need. A plan moves away from the emotional stuff, letting logic take over to ensure the business has pragmatic merit too.
Communicate with others: Stakeholders such as partners, suppliers, staff and even family members like to see things in writing. A carefully written business plan lets them see how you’ve come up with your math and understand your strategy and value proposition. It can help them make choices or simply understand you better.
Secure capital: Banks and investors often ask for business plan for good reason: it shows you’ve thought about your market and your launch strategy. It minimizes their risk and helps them estimate not only if you will succeed or fail, but ensures the money you’ve asked for is the right amount.
Map out a plan: A business plan will talk about execution and offer you a road map for the crucial early steps in getting a business off the ground. From securing money to finding clients to getting product on the shelves, the plan will help you logically work out how you’ll get it all done.
To always be planning: A business plan can act as your starting point for strategic planning. You can revisit it, revise and always be mapping out where you want things to go. A well-planned business, quite simply, is more likely to be successful.