Why Write a Business Plan
Writing a business plan doesn't have to take months, compiling pages and pages of text. You can create a plan in under a month, working at your own pace. Use a presentation format like PowerPoint or Keynote to save time, and make it easier to share.
There is a wealth of resources online to get tips and ideas on HOW to write a business plan. But WHY?
Not all companies are the same, of course. You'll need more detail if you're raising money or asking for a loan or taking on a risk, like investing. But no matter your situation, you need a plan, and here are some key reasons:
1. Avoid mistakes
Nobody wants to work on a start-up for a year, only to find out you were going to lose from the start. Many entrepreneurs learn the hard way that big mistakes are easy to make. Developing and sharing a business plan can help make sure that you're galloping at high speed towards your goal.
2. Remove emotion
Passion is one thing, and it’s a wonderful thing to have about your business, but emotion can cloud your judgment whether that emotion is passion, or on the other hand, doubt and fear. Having a solid business plan in place allows you to step back and be objective about your activities and the facts and figures involved.
3. Coordination
None survive alone. And the likelihood is that you aren’t building an empire all on your lonesome. 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 and how to reach it, step by step.
4. Strategy
Execution is everything. And 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.
An important thing to do as well is ask poignant questions of yourself, such as, “What do my customers need and want from my business, my services, and products?” “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.
5. Capital
No matter the source of your initial cash infusion, whether a loan from a bank, or from friends or family, you will 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.
A study by Babson College found that start-ups with a business plan raised twice as much capital as those without one within the first 12 months.
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