Ten Reasons You Need a Business Plan

If you’re about to embark on a business, then you need to have a business plan. We’re not talking about a business idea that you concocted on a cocktail napkin when you’ve had a drink with a friend. We’re talking about a fully fledged business plan that you can take to a bank and use it to gain some finance to get you started. The answer to that question, if you’re still wondering, is yes, you really do need one. Would you go on a mountain hike without a map? Would you try a brand new recipe that you want to cook to impress somebody without a step by step list of instructions? Of course not. None of those scenarios are going to get you to the successful place you want to be in. So let’s take a look at the 10 reasons that you need a business plan.

1. To help you to set your goals. You can read as many books as many articles, such as Well-Formed Outcomes: The Key to Goal Setting Success, and listen to as many podcasts as you like – a business plan is your key to goal setting. Why? Well, your business plan is going to tell you everything you need to know about what you want for your business. When you set your goals, you can use your business plan to map those goals right out, which gives you something to look at as you go along and start to expand.
2. To help you make those difficult decisions. The whole point of a business plan is that they can help you to be a better decision maker. As an entrepreneur, you’re going to find yourself trapped in an endless exercise of decision making and managing different crises. Considering every single potential ramification of any decision is something that small businesses can’t always afford, but with the business plan, you can determine your answers ahead of time.
3. To show you that it’s possible to iron out the kinks. It’s difficult to get a business going because where do you even start if you don’t have experience before? Do you start with your business name or do you start by looking at an LLC? Do you have those researched and insightful answers to the questions that you want to answer about the industry you’re moving into? Even if you lost your business plan the second that it was completed, the practice of writing it down can help you to put your vision down in real terms. It pulls whatever is in your head into a tangible plan that you can follow. It’s from here you can see any mistakes you might make and start to fix those along the way before you get started and get stuck.
4. To avoid those big mistakes. As we were just saying about fixing mistakes and when you see them, you need a business plan to make sure that you avoid any mistakes happening. When you don’t have a market need, nobody’s going to want what you’re selling. When you don’t have funds, you might find it difficult for your business to continue. There might be stiff competition in your arena, but unless you identify that in your business plan, how are you going to know? You don’t want to be the kind of business that fails in its first year, just like half of all businesses out there. You want to be one that takes a seed of business, plants it, and watches it grow into a mighty oak.
5. To show that your business idea is viable. When you pull your business idea out of your head and get it down in the planning stages, you can prove that the idea that you have while passion is behind it, is not just passion. You’re going to see that your business idea does have a future and that you can feel good about the fact that it finally has a point. You’re not going to just be worried about the fact that it could just be daydreaming. What if you’re just making these castle in the cloud thoughts? That wouldn’t be the case because once it’s on paper, you can see that you have a clear progression.

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1. To set your objectives. SMART goals are like the successful ones we talked about earlier in this article. They’re going to get you where you want to be, and you’ll be able to use your business plan to help you to set those objectives. They also will be able to keep you accountable in those long term visions of yours. You can strategize, gain insights into how your strategy will come together over time, and tell you whether or not it’s working.
2. To help you to communicate. So you want to bring somebody on board and create a partnership. How do you plan to tell them all about your vision without it sounding like you’ve just come up with that after a dream one night? Your business plan is a tangible piece of paper that can tell them what your vision and what you want to create. Your business plan is like a substitute teacher and is ready to answer any questions at any time that there is an absence. If you share your business plan with others, you are sharing your vision with them too.
3. It’s your guide as you go. So you started your business and things are moving along nicely, but you can’t remember what your goals were. You don’t remember the steps you have in place for your What’s next? As a small business owner, you need to have a look at your business plan as you go. This is not a document you just write one day and forget about. It’s your guide and it’s going to show you where your next step will be.
4. Get the money that you need. With your business plan in hand, you’ll be able to get the financing that you need either from the bank or from investors. You’re going to have plenty of nose before you hear that, yes, but at least with the business plan in hand, you have a tangible way of showing people what you are hoping to achieve and then be able to find backing for it.

To reduce your risk. Starting a business is risky. Once you have a business plan though, you can test that risk against it. This will help you to drop your revenue and expense projections and devise logistics and plans. If you can prove that you understand the market and the competitive landscape, you’ll be able to reduce that risk factor from any mistakes.