14 Importance of a Business Plan
A business plan is a communication tool that you can use to secure investment capital from finance houses, lenders/investors, and even grant-offering organizations. It can also be used to convince the right people to work for your enterprise, to secure credit from suppliers, and to attract potential customers. Creating a business plan involves a lot of thoughts. You need to consider what you want to do, and use that as a starting point and it doesn’t need to be complicated at all. At its core, your plan should identify where you are now, where you want your business to go, and how you will get there.
I have heard a lot arguments about whether having a business plan for your business is important or not. Many people hold varied opinion about this subject of the importance of a business plan. In this article, I am going to be showing some proven, research-based and evident importance of a business plan and why you should consider having one. When thinking about whether or not to have a plan for your business, knowing “Why?” is key. If you do not know the purpose of a thing, abuse is the easiest thing to contemplate. Having a good business plan is not an absolute guarantee for success in business, but it can go a long way to reduce the chances and possibilities of failure in a significant way. Below are some of the benefits of a business plan for your consideration:
- Evaluation and validation of your business ideas
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 them to make their business ideas succeed, but it also helps them to achieve both their short-term and long-term objectives. With a good business plan, you can know from the onset whether the whole business idea is worth investing in, or not. Many people have wasted a lot of money on an idea that won’t make money but the felt it would. “The good feeling” which most people have at the point when a business idea struck their minds, is not enough to prove that a business idea is worth pursuing, but a business plan can immediately show you potential pitfalls and cautions you about whether to go ahead or not. writing a business plan forces you into disciplined thinking. An idea may sound great, but when you put down all the details and numbers, it may fall apart.
- It’s a major requirement if you’re seeking funding
Potential investors or lenders want a written business plan before they give you money. A mere description of your business concept is not enough. Instead, ensure you have a thorough business and financial plan that demonstrates the likelihood of success, how much you will need for your business to take off, and the plan you have to make money back into the business. This is a major importance of a business plan.
- For tracking the progress of your business
A good business plan sets expectations and helps you track results. It’s a tool for regular review of what’s expected and what happened. In business, just like in the generality of life, good things happen but disappointments can happen, too. A well-run monthly plan review with plan vs. actual included becomes an impromptu review of tasks and accomplishments. We cannot over-emphasize this point when considering the importance of a business plan
- It affects the quality of your business decisions
As an entrepreneur, you need to understand that a business has many sides to it – and if your decisions will be sound, you cannot take them based on sectionalized knowledge of your business and what is going on in there. Having a business plan helps you to define and focus on your business ideas and business strategies from all the necessary points of view. You not only concentrate on financial matters, but also on management issues, human resource planning, technology and creating value for your customer. Without a good business plan, you lack the actual facts that sound business decisions should be based on. Many times, your decisions will be based on assumptions, expectations and feelings – and all these are not good premises for business decisions. This is a critical importance of a business plan
- It’s an effective communication tools to all stakeholders in your business
No significantly successful business is run by or revolves around a single person. Whether you’re managing a team of 100 persons or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer any questions that anyone may have anytime you are absent. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly. While not every aspect of your business plan should be exposed to every tom, dick and harry, your business plan can be a very good source of information that becomes a guide for everyone that is a stakeholder in your business, especially your staff. Making this kind of information available for your staff and team members helps to communicate your goals, visions and ideals, and ensures that all members are aligned what they are doing (and how they are doing them) to those objectives.
- If you want to sell your business, a business plan simplifies the process
I am sure you must have heard about the recent big sale of a Nigerian Tech company known as Paystack. It was quite a big one in history! This is just trying to let you know that selling your business doesn’t always mean something negative. Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. All these are the information that a basic business plan presents. When thinking about the importance of a business plan, always keep that in mind.
- Helps you concentrate on your area of strength
As a startup, you possibly can’t do everything. Business planning helps you keep track of the right things, and the most important things. Allocate your time, effort, and resources strategically. It helps you to maximize your strength by expending your efforts and limited resources in those areas where profit can be maximized.
- It reduces your risk of losses
Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.
By way of adding to the points I have already made above, I will also tell you about the following importance of a business plan as a simple list.
A business plan:
- Helps you to map out your operations
- Helps you understand your customers and their needs
- Helps you to project required staff strength
- It helps brings “hidden” or “subtle” assumptions (which could be dangerous) to the surface for more realistic checks and analysis
- Helps you to clearly recognize how you will make money ahead of time
- It helps you determine your actual financial needs and takes it out of the realm of assumptions and guesswork
If you need a service of a Professional Business plan writer, then Dayo Adetiloye Business Hub is the place to go Call or WhatsApp us now on 081 0563 6015, 080 7635 9735, 08113205312 or send an email to firstname.lastname@example.org and we will solve any of your business plan problems.
Hope you enjoy this article?
Share your thoughts in the comment session.
Contact us today for your business consultancy and business advisory services. We can help you fine-tune your idea, structure your business, market your business, train your staff, consult on your retirement plan, coach you for financial success. We also write a business plan and help with fundraising strategies and Grant applications. We can help you start, grow, and expand your business.
Call or WhatsApp us now on 081 0563 6015, 080 7635 9735, 08113205312 or send an email to email@example.com and we will solve any of your business problems.