5 REASONS TO HAVE A BUSINESS PLAN

Does every business need a business plan? If you would like to be successful, then - Absolutely! 

One of the most important things you can do for your business, new or existing, is to write a business plan. Whether it is formal or informal, on paper or on disk, the process of creating it will only help your business become successful. The following are our top reasons to write a business plan.

1.    TO GET FINANCING

Whether you're a startup or have been in business for many years, it is highly likely that at some point your business will need money. Bankers, venture capitalist, angel investors, and other lenders generally require a business plan before backing a business financially. Having a well-written business plan gives your business a good chance of securing the money needed to operate and/or expand the business. Cash flow management then becomes more vital when businesses pursue investment opportunities where there are significant cash out flows, in advance of the cash flows coming in. This will put a further strain on the company’s solvency and hence a well-structured business plan will help you manage funding requirements in advance.

2.    TO MAKE STRATEGIC ANALYSIS

There is absolutely no better way to learn about your business strengths and weaknesses, market opportunities and threats and other aspect of your business than to spend time creating a well-researched business plan. Part of your business plan should involve extensive research of your competition and the industry itself, and it is critical to understand your company's competitive advantages.

3.    TO MAP THE FUTURE

A business plan is not just required to secure funding at the start-up phase, but is a vital aid to help you manage your business more effectively. By committing your thoughts to paper, you can understand your business better and also chart specific courses of action that need to be taken to improve your business. A plan can detail alternative future scenarios and set specific objectives and goals along with the resources required to achieve these goals. By understanding your business and the market a little better and planning how best to operate within this environment, you will be well placed to ensure your long-term success.

4.    TO ATTRACT INVESTORS/PARTNERS

A professional business plan is the basis for financing proposals and answers most of investors’ questions. Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. 

5.    TO OUTLINE EACH AREA OF THE BUSINESS

A business plan will provide an overview of all aspects of your business. You will be able to detail the who, what, where, when, and why of your day-to-day business operations, costs, and projected profitability.

© 2010 Michael Maltsev