Why is it Important to Have a Business Plan?
When you’re first thinking about starting a new business, one of the things you’re told to do is to write a business plan. This is not quite as simple as it seems at first glance—business plans can be lengthy, detailed and quite formal. Though they’re a bit intimidating, business plans are an important task to complete before you get going. Here’s why.
If you’ll need funding from a bank or investors, they’ll want to see your business plan. Before they give you money, they want to see that you know what you’re doing, that you’ve thought the process through and that your business has potential to be successful and profitable.
When you’re excited about a new business idea, it’s tempting to just jump in and hope it works out for the best. The process of writing a business plan forces you to do some thorough research. You’ll identify your market, costs and potential profits and ultimately see on paper whether your great idea is feasible or not.
Part of your business plan requires that you figure out who will work with you in the business. Will you have a manager to handle daily operations? Employees? What kinds of professionals will you hire and what are the salary ranges for those people? What is the job description of each employee?
Whether you’ll form a large company with a board of directors, or create a boot-strapped start-up with you and your wife as sole employees, it’s good to know from the beginning who will do what in the company.
Figuring Out the Details
Successful business owners will tell you that it’s crucial to pay attention to all the details of your operations—from suppliers to marketing to lease agreements. Preparing your business plan helps you figure out which details to pay attention to—and what they actually are. For instance, your plan should have a detailed section on marketing (including pricing of your product, demand, marketing avenues and their costs).
The most inspiring part of your business plan is the financial forecast. In this section of your business plan, you’ll set goals for sales and revenue. While you want to be careful that your goals are feasible, they can be really motivational, too. Your investors want to see that your goals are designed to help you become profitable. But when you’re struggling with motivation, your business plan can help you remember why you started your business in the first place and what you can accomplish if you keep your head up.
Guiding You Through the Future
A business plan is nothing more than a roadmap for the way you’ll create and run your business. You’re the first person who will use it—think of it as your how-to guide for your business operations.