Top 10 Reasons to Write a Business Plan – Part One
You have a GREAT idea for a new business – one that you’re convinced will be the next BIG thing and your raring to go. But wait – an advisor you respect and trust has told you that you MUST have a Business Plan before you proceed.
Do you listen to her? Here are my top ten reasons to take her advice and put pencil to paper or fingers to keyboard and do that business plan.
And yes, I understand you aren’t looking for investors or a loan – still do the plan.
Its time-consuming but essential if you want to have a successful business that’s going to survive the startup phase. If your business doesn’t have one, it’s never too late to start. The process of writing a plan can do wonders to clarify where you’ve been and where you’re going.
1. To Outline Each Area of the Business – A business plan will provide an overview of all aspects of the business. You’ll be able to detail the who, what, where, when, and why of your day-to-day business operations, costs, and projected profitability.
2. To Learn About the Market and Your Competition – Researching, analyzing, and writing about the market not only provides you with an overview for the business plan, but gives you greater insight into the overall market.
3. To See If Your Business Ideas Will Work – By writing a business plan and outlining each aspect of your business, you can determine if your idea is actually a good one.
4. To Set Up Milestones – By forecasting where your business will be in six months, one year, or five years, you are not only letting potential investors know your plans, but also setting up realistic milestones for yourself and your employees.
5. To Determine Your Financial Needs – The process of writing your business plan will force you to understand your financial picture.
6. To Attract Top-Level People – Your business plan will give talented people an overview of your business and let them know you’re serious about succeeding.
7. To Attract Investors – Before investors can decide whether or not to back your business financially, they need to know as much as possible about how the business will operate and how their investment will be spent – and it will cost you some equity.
8. To Secure Additional Funding or Loans – Your business plan can demonstrate that you have met goals and illustrate the company’s growth and need for additional funding.
9. To Monitor Your Business – A business plan should serve as an ongoing road-map – a business tool that you can use to monitor your progress.
10. To Devise Contingency Plans or an Exit Strategy – While business plans often include some contingency plans, by virtue of having the document available, you can see how and where you can make such changes relatively quickly if, and when, necessary.
In my next entry, I’ll discuss the essential elements of a business plan.
Michael Shapiro – Dynamic Management Solutions, Inc.