Interacting with a startup entrepreneur, I often face the question that why one needs a business plan while initiating a venture. Most beginners perceive a business plan as only a fundraising instrument required to submit to the bank or any other financial institution. Here we list down the most important reasons why entrepreneurs must have a business plan before actually starting a venture.
However, the truth is the business plan is the most important tool for understanding how to put together everything in your business.
It is useful for monitoring progress and keeping the business accountable. It also helps in making sales strategy, recruitment, and overall financial planning.
The business plan is a written document that describes the nature of the business, sales and marketing strategy, and financial calculations with a projected profit and loss account.
10 Reasons Why Entrepreneurs Must Have a Business Plan
#1. To Define a New Business Venture
By creating a business plan you will be able to define the new business venture properly. Needs of consumers that are identified for a product or services and you will be going to proceed to develop that idea.
#2. To Check Business Feasibility
By writing a business plan with every detail you can determine the feasibility of your business. Additionally, you can create a financial model to project the ROI from a very realistic aspect.
#3. To Calculate Startup Investment
A business plan will help you to calculate and understand properly the required startup budget. Actually, it will help you even to take the decision whether you are having that fund or you need to go for securing investment from outside.
#4. To Secure Investments and Loans
Investors and financial institutions need to see a business plan before they are going to invest. Your business plan can only describe that your business ideas are enough viable to get funding.
#5. To create an Effective Marketing Strategy
By writing a business plan you will be able to create an effective marketing strategy. It involves identifying promotional opportunities, evaluating the market opportunities, researching, analyzing and identifying the target audience.
#6. Study about Competitors
By writing a business plan you will be able to research, analyze and understand the market competitor properly. By monitoring competitors, you will be also able to know their activities and you can start to anticipate.
#7. To monitor day-to-day Operations
A business plan serves the purpose to have an effective tool to monitor your day-to-day business operation. It will give you confidence by showing whether you are on the right track or there is something you need to think about.
#8. To Calculate Business Performance
The most important aspect of a business plan is it acts as a growth engine and shows you the reviews about your business performance.
#9. To Create the HR Manual
A business plan will help you to create an organizational structure and HR manual which is immensely effective for manpower planning.
#10. To Attract Top-Professionals to Come
A business plan will give an overview and a clear vision to talented people. Also, you will be able to set specific objectives for them.
By keeping update your business plan regularly you will be able to take into account the economic climate of the industry. You will be more ensured you always have a clear idea about the direction you are taking your business in.