Importance of a good Business Plan

If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan—or at least the very basic components of one. At its heart, a business plan is just a plan for how your business is going to work, and how you’re going to make it succeed. In its simplest form, a business plan is a guide—a roadmap for your business that outlines goals and details how you plan to achieve those goals. A business plan is a very important strategic tool for entrepreneurs. A good business plan not only helps entrepreneurs to focus on the specific steps necessary for there to make business ideas succeed, but it also helps them to achieve both their short-term and long-term objectives. Reasons you need a business plan: a. The growth of your business. A business plan would help to establish a strategy and allocate resources according to the strategic priority. This, in turn, will help in the growth of your business. b. Business loan application. Like investors, lenders would also want to see the plan and will expect the plan to cover the main points. c. Helps to seek investment for a business, whether it's a startup or existing business. Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points. d. Form a new business. Use a plan to establish the right steps to starting a new business, including what you need to do, what resources will be required, and what you expect to happen. e. Valuation of the business. Valuation is the term for establishing how much your business is worth. Usually, that takes a business plan, as well as a professional with experience. The plan tells the valuation expert what your business is doing, when, why and how much that will cost and how much it will produce. f. Sell your business. Usually, the business plan is a very important part of selling the business. Help buyers understand what you have, what it's worth and why they want it. g. Develop new business alliances. Use your plan to set targets for new alliances, and selected portions of your plan to communicate with those alliances. h. Dealing with professionals. Share selected highlights or your plans with your attorneys and accountants, and, if this is relevant to you, consultants. i. Share and explain business objectives with your management team, employees and new hires. j. Decide whether you need new assets, how many, and whether to buy or lease them. k. Hiring new people. How will new people help your business grow and prosper? What exactly are they supposed to be doing? The rationale for hiring should be in your business plan. l. Decide whether or not to rent new space. Rent is a new obligation, usually a fixed cost. Do your growth prospects and plans justify taking on this increased fixed cost? Shouldn't that be in your business plan? m. Deal with displacement. Displacement is by far the most important practical business concept you've never heard of. It goes like this: "Whatever you do is something else you don't do." n. Share your strategy, priorities and specific action points with your spouse, partner or significant other. Your business life goes by so quickly: a rush of answering phone calls, putting out fires, etc. Don't the other people in your business life need to know what's supposed to be happening? Don't you want them to know? o. Set specific objectives for managers. Good management requires setting specific objectives and then tracking and following up. I'm surprised how many existing businesses manage without a plan. How do they establish what's supposed to happen? Wrap up If you’re serious about business, taking planning seriously is critical to your success. Unfortunately, many people think of business plans only for starting a new business or applying for business loans. But business plans are also vital for running a business strategic planning whether or not it needs new loans or new investments. Existing businesses should have business plans that they maintain and update as market conditions change and as new opportunities arise. Every business has long-term and short-term goals, sales targets, and expense budgets—a business plan encompasses all of those things and is as useful to a startup trying to raise funds as it is to a 10-year-old business that’s looking to grow.