So… You are ready to start a new business but are contemplating whether you need a Business Plan. Perhaps one of your friends advised you to write one but you are wondering whether it will just be a waste of valuable time? With the increase in the rate of competition and the high failure rate of new businesses, building a solid business plan is certainly a smart way to improve your chances of success. If you are still wondering whether a formal business plan is that important and needed to document your business idea, then look at the points below:
A Business Plan will help you in analysing your ultimate purpose
This is one of the most vital reasons of building a business plan. It will help you in determining the ultimate purpose of starting the specific business and even help you in analysing the path that must be followed to gain success. It will give a clear idea on what you need to do to achieve your business goals.
Your Business Case will help you in getting a clear idea about the market
This is of major importance and one of the key reasons for building a business plan. It will help you get a clear idea about the market in which you are going to invest your valuable time and money. You will also be able to get an idea about the level of competition among the various companies that are operating in the same market as you wish to. Moreover, you will be able to analyse what their competitive advantages are and map a strategy how to compete with this.
It should give you an idea about funding opportunities
While starting a business, most people face the problem of deciding on whether to use their own funds or approach an investor or bank for a loan. A proper business plan will help you in analysing the merits and risks of each of the funding options and thereby enable you to choose the best one. Apart from this, a detail business plan will also help you in conveying your business’ reason for existence to prospective investors in a smart and credible way.
It will show you how to handle cash flow effectively
This is certainly the most import reason for building a detail business plan. No cash in the business means closed doors. Since poor management of cash flow is the ultimate reason behind insolvency, it will certainly be wise for you to gain insight into the way your business can expect to earn and spend cash. Profit is nothing. Cash is everything.
Lastly, the business plan will help you to decide on how to promote your business
Since the ultimate success of a business depends upon its brand promotion, a proper business plan will help you in deciding how to use advertising techniques to communicate with potential customers. A solid business plan will help the employees, investors and other stakeholders in communicating with each other in an effective way … if everyone knows what is expected of them, they can achieve it much quicker. Use your business plan as your communication tool.