In the 1980’s, drivers navigated the highways using an atlas. In the 1990’s, digital satellite images enabled us to print directions from the computer using MapQuest. By the early 2000’s, smart phones allowed users to access google maps to easily project turn-by-turn directions.
Business plans are like roadmaps.
You can maneuver without a directional guide, but your likelihood of getting lost is much higher. Why take the risk of going in circles when you’ve already committed to traveling the distance?
A business plan allows owners to advance their progress without having to stop-and-go, getting lost, or spinning their wheels unsuccessfully.
Entrepreneurs often use business plans as helpful guides.
They help business owners see the bigger picture, plan ahead, make important decisions to improve overall success.
What Is The Importance of A Business Plan?
Ultimately, a business is your recipe for success. A well-written plan gives entrepreneurs the ability to lay out their goals and track progress as the business grows.
Just like getting directions to a foreign location must be your priority before traveling, likewise, formulating a business plan should be the first thing done when starting a new business.
Also, business plans attract savvy investors.
A good business plan is typically comprised of at least 8 components:
- Market analysis,
- Competitive analysis,
- Customer segmentation,
- Marketing,
- Logistics
- Operations plans,
- Cash flow projection, and
- Overall path to long-term growth.
Despite how tedious and time-consuming, business plans must be your first priority if you plan to succeed in a competitive market.
Even if you own or operate a small business, there are 10 concrete reasons why you need a plan to excel.
10 Facts As To Why You Need A Business Plan
1. Help with Critical Decisions
All businesses are created with a purpose or primary importance, yet, in order for the business to effectively grow a business plan will help you make critical decisions. Entrepreneurship is all about decision making, crisis management and engaging solutions. A business plan allows entrepreneurs to consider ramification prior to problems occurring. A robust business plan with a savvy marketing strategy provides the answers for all the tough scenarios that may arise in the future of the business.
2. Iron Out the Kinks
Assembling a business plan demands that entrepreneurs evaluate every aspect of the business in order to come up with well-researched and insightful answers. If nothing else, a business plans helps entrepreneurs to be able to articulate the vision and mission. Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers.
Ironing out all the kinks in the early stages will help eliminate the gaps in your strategy.
3. Avoid Big Mistakes
According to the small business administration, about 50-percent of small businesses fail. This is
often because many of them lack an adequate business plan.
Some of The Most Common Reasons Businesses:
- No market
- Lack of capital
- Inadequate team
- Stiff competition
- Pricing
Ultimately, an adequate business plan can help you avoid these major mistakes by spotting some of the critical mistakes ahead of time.
4. Proof of Business Viability
A great business idea requires more than sheer passion to survive. A business plan is proof that a great idea excels with market research. Turning a great idea or dream into success is done through a business plan – this is how a concept becomes a successful reality. Market research can offer deep insight into your customers, your competitors, and your chosen industry. It will inform and instruct you on best business practices.
5. Setting Objectives and Benchmarks
Without a business plan, objectives often become arbitrary. A business plan helps make benchmarks more intentional and consequential. A business always reels owners and operators back into focus as the years progress
6. Communicating Objectives and Benchmarks
A business plan also empowers you to become more time conscious. It defines the next steps needed before difficult circumstances arise. Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing. Your “big why” is important to the entire team.
7. Provide A Guide for Service Providers
Small businesses typically employ contractors, freelancers, and other professionals to help them with individual tasks like accounting, marketing, legal assistance, and as consultants. The same is true for residential assisted living businesses. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.
8. Secure Financing
Prepare to pitch. It’s impossible to effectively pitch your company without a business plan. This will enable pitching to venture capitalists, borrowing from a bank, or consideration for sales. A business plan is the most effective way of showing your requirements for seeking outside financing.
9. To better understand the broader landscape
No business is an island. Writing a business plan can go a long way in helping you better understand your competition. It also illuminates consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.
10. Reduce Risk
Entrepreneurship can involve a certain amount of risk. You can manage most risks with a well-crafted business plan.
When entrepreneurs create revenue and expense projections, devising logistics and operational plans, an understanding of the market and competitive landscape helps reduce the risk. Leave less to chance. Make better decisions. This starts by writing a clear business plan. Having this important tool allows you to leave less up to chance, saves time and money, and illuminates the clearest possible view of the future of your company.
