Writing a business plan is important for various reasons, including but not limited to getting a bank loan, investment, or serving as a roadmap for many types of businesses. It defines the operations, milestones, expenditure, and more than the business will go through, and so, makes it important for entrepreneurs to have one before a business takes off or while the business is still in operation.
Despite a business plan’s importance, many businesses that launch daily never start with one. This neglect goes on to sometimes cause problems in their daily business operations, goals, and finances since they have no roadmap to follow.
If you’re thinking of why you need to prepare one for your startup, here are 10 reasons to write a business plan.
1). To Gain A Deep Understanding Of Your Market:
Gaining a deep understanding of your target market is one of the most important reasons for writing a business plan. A detailed business plan based on an in-depth market research would give you comprehensive insights into the business you’re about to start. It would show you the potential market size, known consumer behaviors, available competition, and a lot more.
A deep understanding of any market you’re venturing into is important to your success. And preparing a business plan before you step a foot in, will give you a better head-start.
2). To Predict The Future:
A business plan can help you manage the direction of your business more efficiently.
Putting down your strategies, consumer insights, and more on paper would help you better forecast where you plan to see your business in the near future. This will help you understand your business better, and guide you in making related decisions that will help you improve your business.
As you determine what route your business would take, existing and forecasted market trends would give you a fair idea on if your plans would be effective on the long-run or not.
3). To Secure Investments & Support A Loan Application:
Just like financial institutions and professional money lenders, some investors want to know they’re not throwing money into the thin air. They want assurances that their investments will pay off.
Since investments are highly competitive, investors will not just need a business plan but would want to see in-depth profit and loss statements, cash flow projections, balance sheets, and a whole lot more.
Financial institutions like banks, micro-finance institutions, and certified money lenders will want to see a business plan that shows if the loan they’re disbursing to your business would be recoverable or not. Here, your business plan must show an impressive growth potential and must be completely detailed.
4). To Keep You Organized:
Writing a business plan will help you stay organized and on track. A good plan for a properly organized business would lead to more revenues generated yearly.
Without a great plan, you could easily lose your focus, and your revenues would go on to suffer for it.
5). To Establish Benchmarks & Milestones:
Writing a business plan is a way to set milestones for your startup.
By setting benchmarks, you can stay focused and work harder to attain your goals. Any business without milestones set would be unable to truly measure its progress rate.
When goals are set, attained, set again, and attained again, your business can experience growth in a good direction.
Using a business plan as a benchmarking tool would help you know where you’re exceeding your expectations, where you have shortcomings and a whole lot more.
6). To Position Your Brand & Uncover New Opportunities:
Preparing a business plan can help you know where your business stands in the marketplace. This is key to knowing how to better present your business to your target market, the position you well against your competition, and show you how to generally strive for growth.
During your market research process, you could also discover new business opportunities. Looking at your business plan from different angles would give you a newer perspective on how to address customers. This could show you problems consumers already face and how to solve them.
7). To Sell Your Business:
Before you can sell your business, you’d have to show growth progressions or regressions, income statements, profit & loss statements, and more. These are crucial to determining what your business is truly worth, and if your business is capable of growing beyond its current state.
A well-written business plan would show buyers and potential investors the true business opportunity that’s theirs for the taking in your business.