December is National Write-A-Business-Plan Month
The end of the year is just around the corner now, and if you catch yourself thinking about where the time has gone, this is a perfect opportunity to get a head start on your New Year’s resolutions, and plan for the year ahead.
A study by Babson College found that start-ups with a business plan raised twice as much capital within the first 12 months as those without.
There are many resources online to get tips and ideas on how to write a business plan. But the more important question is why you should write one. These are some of the key reasons:
1. Avoid mistakes
A business plan will map out the market, the demand, and the viability of the idea. Many entrepreneurs learn the hard way that big mistakes are easy to make in the heat of passion about an idea. Developing and sharing a business plan can help make sure that you're not heading for disaster.
2. Remove emotion
That passion is a good thing, but emotions can cloud your judgment. Whether that emotion is yours or coming from others, whether it’s passion or doubt and fear, a solid business plan allows you to step back and be objective about your activities and the facts and figures involved. A good business plan can work wonders against those who tell you it can’t be done.
3. Coordination
It’s unlikely that you’re setting out to build an empire all on your own. You’ll have partners, collaborators, colleagues, advisors, and even helpful friends and family. A business plan will take all of these well-intentioned partnerships, and align them toward a stated goal, with a step-by-step plan to reach it.
4. Strategy
Without a plan, you’re flying blind. In order to execute successfully, you’ll need a strategy. In other words, you’ll want to set priorities, write goals, and sub-goals to measure your performance and forward progress in reaching those goals.
Ask yourself some very pointed questions, such as, “What do my customers need and want from my business? What problems will my services and products solve? What is the price point of those services and products? What is attractive or sellable about those products? What is the best way to market those products and services?” These are all things you'll address during the business planning process, and it will give you valuable insights into how to proceed.
5. Capital
No matter the source of your initial cash infusion, whether a loan from a bank, or from friends or family, you’ll need to be able to communicate to your potential investors your vision for the company, as well as the value in it. A good business plan will do this in a clear, concise, and compelling way.
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