Why you need a business plan?
The importance of a business plan cannot be underestimated, even though most people have the notion that it is an old school method, it is imperative for a business to possess one. This is because the success and the process in which the business will go through in order to grow might depend on it.
Wondering what a business plan is, here is a brief description. A business plan in simple terms can be described as a document that outlines the goals of a business and the ways of achieving them.
Why you need a business plan?
Most entrepreneurs fail to make business plans because they do not know its importance. Here are some of the reasons why you should formulate a business plan.
It can help in steering business as it starts and grows
A business plan acts as a guide for each stage that a business will go through; that is its starting and management. It gives a complete guide of how to structure, run, and grow the business.
- Can help in reaching business milestones
A business plan that is well thought and strategic can be very important; this is because it will help in thinking objectively and making informed decisions in
booth financial and managerial issues.
- Can help a business get funding
A good business plan can help a business get funding when the need arises and attract potential investors or business partners.
- Helps in understanding your competition
The creation of a business plan forces the person interested in starting the business to analyze their competition. A person needs to understand their direct and indirect competitors and the competitive advantage they might have against them.
- Assists in assessing the feasibility of your business venture
A well thought business plan helps in manifesting the practicability of a business venture. By analyzing the target market and the competitive edge, it will serve as a feasible study and analysis for the business venture’s success.
- It helps in minimizing the risk of pursuing the wrong business opportunity.
A well-thought business plan helps in assessing the viability of a business. Thus, if through research and analysis of the competition and other factors show the venture’s infeasibility, it will help in discouraging the persuasion of such.
- Helps in documenting the revenue model of a business
It is important to analyze how the business will make money. This
Questions that should be answered by your business plan:
- What is the reason for the existence of your business?
A business plan should elaborate on the problem that it is aimed at solving.
- How is the business going to solve that problem?
A good business plan should introduce and have a detailed description of its reason for the operation. It should include a vision statement, mission, and objectives of the business.
- What competitive advantage will your business possess against its competitors?
The business plan should describe the competitive advantage it has against its competitors and ways to sustain itself in the market.
- Who is your target customer?
It should state out the customers that it targets to sell to. This assists in enhancing and defining the strategy that will be used for marketing.
- What strategies will be used in marketing and promotion
After identifying potential clientele, a business will need to have ways of reaching them that is through proper marketing and promotional strategies.
- What will be your operating budget?
The financial aspect of the business should also be addressed, it is important to know how much it will cost to run the business month by month until it breaks-even.