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Why do you need a Business Plan?

Are you an entrepreneur running a small business?  Do you know exactly what you are doing?  Chances are that most entrepreneurs are running their business without long-term planning.  However, in order to succeed, your business needs a plan, a strategy, or a list of goals that you want to achieve.  If a bank asks you about your business, your answer should reflect the details that are listed in your business plan.

A business plan should be formed in the early stages of starting a business.  If not, it’s never too late to formulate and construct a plan that reflects your strategies for operating your business and making it successful.

Business plan basics

What is a business plan?  In short, it is a clear and concise written outline of your business concept and plans for running and marketing the business.  In addition, it is an overview of competitors and how you plan to compete for business.  It is also a detailed estimate of finances, including projected income and expenses showing your profitability.

As noted above, your business needs defined steps on how you plan to achieve your goals.  A business without a plan is like a ship floating in the ocean without a navigation system, or a lighthouse beacon for protection and guidance.  Tragedy can strike against the rocks and you’d never see it coming.  Your business plan shows you the path and direction that gives you the guidance to navigate along the murky waters of business operations. 

Start with your goals as the foundation

Define your goals.  Do you want your business to grow?  Do you want your business to be successful?  Do you want to increase profits each year?  How will you do it?  Sit down and think of what business success means to you.  Write a clear business plan that includes what you need to do to increase profits.

Eliminate any potential miscommunication

Do you have partners?  A plan is a good way for all partners to sit down together and agree upon their individual duties in their part of the business.  Define how disagreements will be solved.  A business plan will prevent hard feelings and doubts between partners regarding their position and responsibilities within the business.

Use a business plan to obtain financing

Do you need financing in the form of loans or independent investors?  Any bank or individual who may loan you money will want a copy of your business plan to review your strategies for success.  Your success means they will get their money back on time as agreed.  A detailed financial section in your business plan shows realistic startup costs, planned revenues, and expenses that will allow lenders and investors to make wise choices to invest in your business.

If you are starting a business, there is no doubt that you want it to be successful.  A business plan will help you on your way to compete in the marketplace and devise an effective marketing and financing strategy.  Sit down and write a clear and concise well written plan for your business.  It will be your guiding light.