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Why is business plan important?



If you are starting a business, having a business plan is a must but it is also important if you already have established business. The biggest mistake is to see business plan as something static, with time it will change just like your business. In the growth phase good  plan will help you with forecasting sales and raising capital. Later, it can help you to see what goals you have accomplished and what new ones you need to add. Your business plan must be well thought so it represent your company in the best possible way.

Good written business plan let others know that you are serious and that you can handle all that running a business requires from you. There are couple of necessary elements that your business plan needs to have: executive summary,  business/industry description, market analysis, competitive analysis, sales and marketing strategies, organization management, operating and financial plan including funding requirements.

The executive summary is the first thing in the business plan but it is usually written last. Basically it is the short description that represent the key elements of your business. Business and industry description gives the overview of the industry sector that your business will be part of and its position within that industry. In market analysis you inform the reader about your target market, profiles of your customers so you can make prediction how much of your good will be sold. Competitive analysis examines your competitors and the ways you could overcome them. Explanation of your sales strategies, advertising and promotion plans fit in the marketing and sales section. Showing off your team is also important part of your business plan just like the financial plan and funding requirements that should make realistic projections.

There are several good reason why business plan matters. I am sure that you already guessed it just from reading the elements of a good and detailed business plan. First is that you can test the feasibility of your business idea. When you put the things on paper it will be easier for you to see if your business idea is unattainable so you will save a lot of time and money. Market and competitive analysis are usually critical in a business plan. Writing a business plan will ensure that you pay attention to every detail and in that way you can avoid many beginner mistakes. It is very likely that your business will need funding. Having a good business plan can really help you to getting the money from financial institution to keep your business operating or expand it. Also good business plan will help you attract venture capitalists and angel investors.

Even though it can be time-consuming to write a good business plan your efforts will be rewarded.  You will be able to identify potential problems, survive startup phase and prepare for success.

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