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16 Top Reasons You Need a Business Plan

16 Top Reasons You Need a Business Plan

16 Top Reasons You Need a Business Plan

Last month we explored what a business plan is and why you need one. Remember that a business plan is a written document that essentially describes your business. It comprehensively states your business’s objectives, goals, strategies, and forecasts.

As part of that article, we listed five of the top reasons you need a business plan. In this article we go into more depth, and explore the 16 top reasons you need a business plan.

1. To show you’re serious about business

When you write up a business plan, you essentially tell the world that you mean business. Literally. Your business plan puts in writing that you are committed to growing it and making it a success. This is what investors, employees and partners want to see. It’s also a way of holding yourself accountable to yourself.

2. It acts as a road map

A business plan should give you an idea of where it is that you want your business to go. Every road map has certain milestones. These are the things that you want your business to achieve. By putting them down in this document, you gain clarity on what your milestones are and how long you want to take to achieve them. It’ll also help you measure whether you’re of or behind targets and goals.

3. It forces you to analyze the competition

This is vital when you’re setting up your business. You need to know who’s out there, what they’re offering, and how they’re offering it. Only then can you work out your USP and hone your competitive advantage.

4. It forces you to analyze your customer

Why do your customers behave in a certain way? Why do they buy at certain times and not at others? An in-depth analysis of your customer will allow you to create better products, services, and the most cost-effective marketing plan.

5. To tackle assumptions

When we start a business, we make assumptions. We assume certain people will buy from us and others won’t. We assume that certain stores will stock our mechandise, and others won’t. A business plan forces you to write it all down and then establish whether the assumptions are realistic, and whether or not they can be acted on.

6. Feasibility, Revenue and Finance

All of the above steps are going to inform how feasible your business venture is. This is vital for understanding how much revenue you’ll be able to bring in and how you might need to finance your business. When you document your revenue model, you may find that you need other income streams initially, to get everything up and running. It’ll also help you to become clear on how much capital you need to raise.

7. Investors

This brings us to the subject of investors. If you need a loan, investors will want to see your business plan. It is the basis of finance proposals. They want to know that you have a clear vision for your business so that their investment is worthwhile. They’ll want to know if there’s a need for your product/service, the financial projections and whether or not you have an exit strategy.

8. Market research

Here, you should be answering questions around trends in your industry, threats to your industry, and whether the market is growing or shrinking. This will all inform the decisions you make going forward, and it’ll reduce the risk of you pursuing the wrong opportunities.

9. To attract personnel

At some point, once you’ve grown and scaled, you’ll want to bring on team members. These could be employees and/or management. They are going to want to know that your business is viable and that you have a strategy. It will keep them aligned and motivated and this will, ultimately, be beneficial for everyone involved.

10. To attract partners

If you’re after a partnership for the purposes of increased capital, then prospective partners will want to see your business plan. They need to know that your business is a worthwhile investment, and a well-thought-out business plan will do that.

11. To give your brand a voice

A strong brand voice is everything. Who are you talking to? What are you saying? What beliefs are you connecting with? How are positioning yourself and your business in society?a More and more, these things matter. People will look to your brand not just for what you can offer in the way of services and products, but how you’re contributing to society. Your business plan will help you figure this out and then weave it into all your branding.

12. Targets and goals

When you formalize your business plan, it should contain the results that you want to achieve: your financial, operational, and strategic goals. Setting these out in your business plan will allow you to see if you’re achieving these or not, and if not, why not. You can then make the necessary changes and adjustments.

13. To manage change

Your business plan is exactly that: a plan. It’s written at a time when certain factors are in place. But things change. When things change, the plan needs to change too. If something unexpected happens (like a pandemic or a recession), or if something isn’t working as planned, rewriting your business plan is a great way to come up with new ideas, and strategies.

14. Your marketing strategy

You business plan should detail the ins and outs of the marketing plan. What is your advertising budget? How will you reach your audience? What prices are you going to charge? It’s important to remember that these things will grow and change as your business does, so it’s important that you revisit this every year.

15. Staff

Putting this into your business plan, even if you are the only person in the business at the beginning, is a good idea because ultimately you will scale. As you grow and scale, it will be useful to know which staffing needs you want to fulfil first, and what that will look like for your business. When it’s laid out in your business plan, you’ll be able to pinpoint exactly when it’s the right time for you to hire someone.

16. To help you scale and grow

When you write things out and brainstorm them, many ideas come up. You’re likely to have more ideas while doing this than when you simply sit and think about things. You may define and establish an idea or strategy that you hadn’t thought of before. This will help you access opportunities more quickly and your business will grow.

The final word

Essentially, your business plan is an action plan. These 16 reasons why you need a business plan, show you why it’s important to take your ideas and turn them into strategic goals. Start working on your business plan sooner rather than later, and it will help you in a variety of ways.

If you’d like to find out more about the support we give to business in and around Washington DC, visit our website.

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