You write a business plan for yourself to help you to think through your strategies, balance enthusiasm with facts by testing your assumptions, recognize your limitations and to clarify or concretize your thoughts.
A business plan can also be written for seeking funds to help start a new startup and for expansion. It’s considered as a blueprint of your success and is the selling tool or resume to attract lenders or investors to participate with you in your venture.
The purpose of writing also determines its length. If you are seeking large amount as capital, you will be required lots of explaining and convincing, for which you need a lengthy plan.
Before letting you know why you should write your business plan, we will tell what outsiders are looking from a business.
For a investor or banker a written business plan should demonstrate a good likelihood of success. These outsiders’ wants to see how you understand the market, the real issues market and your customers are facing and how you will succeed with the money raised.
In this case, your business plan should explain why you need a loan, from where money comes and where it goes. You can use it to persuade banks and prospective investors to give you money. To persuade them, you must prove that your idea is sound, your team is competent to run the startup and it will make money for them.
You must make sure that you clearly communicates your organization’s value, customers existing problems and amount of investments required to bring your products or services to market. You should also ensure that you pay attention to the operational and financial objectives of the business. It helps you to make optimum pricing strategy and how you intend to reach your customers.
Please note, writing a business plan is not a one-time exercise. To guide you and clarify your thoughts, we suggest you to write, rewrite and revise it.
A perfect Business plan can protect you from so many wrong decisions. Here are all the top possible reasons why you should write your business plan:
- The first and foremost reason why you write a business plan is to clarify and concretize your thoughts. By doing so, you will be forced to think explicitly about issues you might not have considered at the beginning, such as what must be done tomorrow, next week or month or year.
- To do a feasibility study. It means, you should assess practicality of your success.
- To define and let others know the structure of your management, industry, product or services and how you are planning to make your concept a success.
- To show the strategy you adopt to implement your plan, to reach and persuade customers and how the strategy will work in the present market conditions.
- To know your potential customers and geographical area to which they belong and what makes them buy your products or services.
- To write down the competitive advantages your product has over competitors.
- To show the skills and competency your key management has to make the plan a success.
- To show what you need to be successful and why you are seeking finance. You have to clearly specify how much will be the total investment and how are you planning to finance it.
- To what the capital structure you are planning to adopt and how are you going to achieve it.
Writing a business plan is time consuming and not a one time exercise. To run a successful business and to survive the phase of your fundraising, you must have a business plan. If you haven’t written it yet, then it’s time to start working on one.