Do You Really Need a Business Plan?
The art of storytelling, from net margin to sales.
Why is a business plan important?
- Who will the reader be?
- What do you want their response to be?
Four Reasons to Write a Business Plan
1. To raise money for your business
2. To make sound decisions
3. To help you identify any potential weaknesses
4. To communicate your ideas with stakeholders
More by this contributor:
- Challenges Become Opportunities
- Discontinuing Healthy Workplace Consultancy
- Financial Planning for the Pandemic
Comments (0)
You may like.
How to Write a Business Plan for Your Small Business
Online Master of Business Administration
Entrepreneur Business Plan: What It Is and Why It’s Important
July 29, 2022
There is a tried-and-true saying: Failure to plan means planning to fail. This is one reason why your business plan is one of the most important documents to produce when starting a new business. Needing a business plan is a relatively common issue. According to the U.S. Small Business Administration (SBA), only 67.6% of new businesses will survive at least two years. In other words, 1 in 3 new business ventures won’t last 24 months.
The online business and investment site Investopedia states that one of the main differences between success and failure for new businesses is ineffective planning prior to starting operations. It stands to reason then that entrepreneurs who make a business plan have a number of advantages.
Writing an entrepreneur business plan can help you think deeply about your business and the strategic steps you will take to achieve your goals. The plan can crystallize your idea and affirm the amount and type of funding needed to start and grow your venture. While there are many resources to help you define your business plan, a sound strategy is to pursue relevant college coursework.
Courses such as those offered in a Master of Business Administration (MBA) program can give you an in-depth understanding of business management. This understanding can serve to place you among the new businesses that succeed.
What Is a Business Plan?
Some primary components make up what a business plan is. These can increase your likelihood of success.
- A business plan should describe every aspect of your business, from the product or service you offer to your finances, management, and marketing plans. It’s designed to tell your stakeholders — potential lenders, investors, and suppliers, for example — the goals of your business and how you plan to achieve them.
- A business plan should be a changeable, continuously growing document. You won’t simply create it, then put it aside and never look at it again. It should be revised and amended as the business grows and changes. You can think of your business plan as a blueprint for success. It’s not only useful when starting your business, but also while running it. Monitoring and assessing whether your business is meeting goals and objectives is a key strategy for staying in business.
- You should implement a timeline to continually review and adapt your business plan. Ongoing business planning is also attractive to those interested in supporting or joining your ventures, like bankers, investors, and executives. These parties want to ascertain the soundness of investing in your venture. Having a business plan that’s regularly updated, rather than allowed to stagnate, makes it more likely for parties to receive a return on their investment.
Smart, regular business planning shows that you know how to analyze and evaluate the progress of your business and reprioritize and reallocate resources, if necessary, to hit your targets.
Types of Business Plans
No two entrepreneur business plans are alike. However, there are several different types of business plans that entrepreneurs may use as templates. It’s important to form a basic understanding of these types prior to using them.
Internal Plan
An internal plan is intended for the people associated with your business. In a startup, these could be the people who will fill specific positions once it gets going. The tone of these plans can be more casual in nature.
External Plan
An external plan is intended for individuals outside your business. This plan, which is typically more formal in nature, provides detailed information on the business and its finances. It also typically includes a funding request.
Traditional Plan
Traditional plans are detailed documents that can be dozens of pages long. These plans typically provide a comprehensive company overview. They can be used in situations for securing funding, building out business strategies, and preparing for unforeseen circumstances.
Lean Startup Plan
A lean startup plan is a quick summary of your business. This type of plan can be as short as a single page and requires less time to create. It typically focuses on key business elements, such as the value you will deliver to customers, who your customers are, the infrastructure you will use, and how you will finance it.
The type of entrepreneur business plan you choose to develop will depend on your audience, whether you want to raise funds, or want a simple plan to remind you of your goals. Many businesses have different versions or easily adaptable plans that can be tailored to a specific purpose.
Why Is a Business Plan Important?
Business plans are important for sharing the vision of your business with stakeholders and other relevant bodies. It can demonstrate that you haven’t just considered the results of starting a business, but you’ve also created a detailed plan to get your business from idea to execution.
An effectively written business plan can be used as a persuasive tool to help others understand and meet your business goals. This could include convincing potential investors to finance your business. It can also help you form additional strategic partnerships after you’ve been established.
Elements of a Business Plan
Readers expect to see certain categories and elements of business plans. Not every section is required, but many have the information that banks, investors, and venture capitalists look for when deciding whether to risk their money on your new enterprise.
1. Executive Summary
An entrepreneur business plan’s executive summary highlights the key points about your business, including product or service, mission statement, leadership team, location, and other important information. Because it gives an overview of your entire plan, many people find it easiest to write this section last. If you plan to ask for funding from a bank or private investor, you should include financial information and your growth plans. Investors and other stakeholders should understand what your company is and how it plans to be successful.
2. Company Description
In this section, you should go into detail about the need your business fills and who will benefit from the solution. This is where your strengths should be listed, such as expertise in the field, a great location, or a revolutionary product. Remember to be specific and clearly define the market your business will target.
3. Market Analysis
This section requires a significant amount of research. It must show a detailed understanding of the trends and outlook of your industry. Additionally, you should include information about your target market and competitors. Think about what other businesses in the industry are doing well, and how you can find a profitable place in the market.
4. Organization and Team
Explain in detail the legal structure of your business, whether it’s an LLC (limited liability company), partnership, corporation, or sole proprietorship. You should also include an organizational chart, so readers can clearly see who oversees each area of the organization. You may wish to include a short biography of each team member to emphasize how their skills and experience will contribute to the success of the venture.
5. Services or Products
In this section, describe your product or service in more detail than in the “company description” section. You should also explain how it benefits or solves your customers’ needs. Go into detail about any ongoing research and development. If you’re filing for patents or copyrights, include that as well.
6. Sales and Marketing
There are many ways to market products, and this section will continue to evolve with them. Include all the marketing strategies you plan to use, such as social media or direct mail campaigns. You should also explain how sales will be transacted, such as through a sales network, online, in a brick-and-mortar store, or on the phone. It’s also a good idea to provide information about how you plan to track the performance of your marketing campaigns, so you can judge where your dollars are best spent.
7. Request for Funding
In the request for funding section, you should explain to prospective investors your financial needs, projecting out for the next five years. Explain exactly how that funding will be used. Remember to state the terms of the funding you’re looking for, and include a description of financial projections, such as selling the business or paying off debt.
8. Financial Projections
Following the request for funding, this section projects the finances of your business for the next five years. It should include forecasted income, balance sheets, cash flow, and capital expenditure budgets. You should be conservative and realistic when making projections, because you need to be able to support your numbers. Use graphs, charts, and spreadsheets so readers can easily understand the presented material.
9. Appendix
Your appendix contains all supporting documentation that you need for your business, like product descriptions, licenses, permits, and credit histories. Depending on who is reading your entrepreneur business plan, further information may be required. It may include the resumes of team members, photos or illustrations of your products, legal documentation, patents, and other documentation.
Plan for Success
Business plans are integral for success – they can help secure funding, project financial growth, and flesh out operational details. Creating an organized and effective business plan requires a deep understanding of business management and expertise in the relevant industries.
An advanced education can help you gain the skills and insight to be a successful entrepreneur. With nine concentrations, including Business Venturing and Entrepreneurship, Ohio University’s Online Master of Business Administration program can arm you with the knowledge to start your own business.
Learn more about defining your business plan and creating a blueprint for success with Ohio University.
Recommended Readings
The Benefits of an MBA in Business Venturing and Entrepreneurship
How an MBA Helps Entrepreneurship
10 Steps to Starting a Business
Chamber of Commerce, Small Business Statistics
Forbes , “Business Plan Template: A Step-by-Step Guide for Entrepreneurs”
Forbes , “The Different Types of Business Plans”
Houston Chronicle , “Why Is It Important to Have a Business Plan?”
Inc. , “How to Write the Perfect Business Plan: A Comprehensive Guide”
Investopedia, “Business Plan”
Investopedia, “The 4 Most Common Reasons a Small Business Fails”
U.S. Small Business Administration, “Frequently Asked Questions”
U.S. Small Business Administration, “Write Your Business Plan”
About Ohio University
Founded in 1804, Ohio University is the ninth oldest public university in the United States. Located in Athens, Ohio, the school serves more than 35,000 students on the 1,850-acre campus, and online. This esteemed institution is ranked by numerous publications, such as The Princeton Review , U.S. News & World Report , Business Week , as one of the best education forces and academic values in the country. Ohio University offers a variety of programs across 10 different colleges, including 250 bachelor’s programs, 188 master’s programs and 58 doctoral programs. Ohio University is regionally accredited by the North Central Association of Colleges and Schools.
Ohio University has a long-standing reputation for excellence based on the quality of its programs, faculty and alumni. If you are a professional who strives to align with one of the best, you need look no further than the esteemed on-campus and online programs offered at Ohio University.
Interested in joining the WSI family?
We'd love to chat further to see if there's a mutual fit.
Request More Info
We're a Unique Franchise Network
Ask any of our zees, and they'll tell you, "WSI is more than a network...it's a family!"
Reasons Why a Business Plan Is Important for Entrepreneurs
Editor's Note: This post was originally published in September 2018 and has been updated with new content that highlights the importance of proper business planning in 2021's economy.
What is a business plan? For people who are just starting out and forming their own company, whether it's a small freelance business at home or a new venture with an office and a starting pool of employees, there's a lot of importance to a business plan. It is a road map, an outline, a document that explains what your business is, what the goals of the enterprise are, and how exactly it will set about achieving those goals. So beyond being a document that identifies your business, what else does such a plan do for you?
1. Target Your Problems
2. Get Better Advice
The importance of a business plan to entrepreneurship can also be in the way it crystallizes just what kind of help you need. Merely telling a friend or potential business mentor you're aiming to start with ten employees, for example, is not an exceptionally detailed statement. Showing a business plan that outlines the exact duties, salaries, and expectations you have for employees gives far more information for people to provide advice about.
3. Organize Your Resources
A business plan is also essential as the primary guide for how you will structure and allocate your resources. It's here that you will see just how feasible it is to open an office, hire employees, and look at operating costs. The business plan can quickly show you whether you will be making a profit or running at a loss, and it shows how much those losses may be every month.
4. Approach Investors
For some, this may be critical. Investors want to know that you know what you’re doing. A business plan can often be the single most important document you can present to your investors that will provide the structure and confidence that they need to make decisions about funding and supporting your company.
5. Create Milestones
A business plan is also a plan of action. By laying out milestones, you now have targets to shoot for in the short, mid and long term. These goals also mean that you can "course correct" with greater agility if you have targets and realize that you may need to make some changes in order to meet them.
The importance of a business plan can be critical for entrepreneurs. Business may have some artistry to it, but real success comes from having a vision and being organized in the way you strive towards that vision. A business plan will help you immensely and in so many ways!
Template for a Business Plan for Entrepreneurs
To determine whether you have a solid business idea, you will need to do thorough research and create a business plan to see if your idea is feasible. Here is a simple business plan template that is broken into sections that include the key elements for what goes into each step of the process to help get you started.
Section 1: Executive Summary
Write an executive summary. The purpose of the executive summary is to give readers a high-level view of the company and the market before delving into the details. It appears first but is written last and provides a snapshot of your company explaining who you are, what you do, and why. The executive summary provides a short, concise, and optimistic overview of your business to capture the reader's attention and create a need to learn more.
Section 2: Business/Industry Overview
Describe your company and business model by summarizing what your company does, your mission statement, location details, business structure and business owner details, the marketplace needs that your business is trying to meet, and how your products/services meet those needs. Define your business's purpose (mission) and a statement based on your perception of the company's growth potential (vision). Include specific business goals and objectives. Provide background information about the company, including a brief history of the business and a list of fundamental company principles.
Section 3: Market Analysis and Competition
Analyze your market's conditions. The market will ultimately determine how successful your business will be. You will need to demonstrate that you have thoroughly analyzed your target market and have a high-enough demand for your products/services to make your business viable. The competitive analysis should include a comprehensive assessment of your competition and how your business will compete in the sector. Describe the industry within which your business will operate, identify and provide a general profile of your target market, and describe what share of the market you currently have or anticipate. Include both an analysis of research done by others, along with primary research you have collected yourself — whether via customer surveys, interviews, or other methods. Outline the strengths and weaknesses of potential competitors and strategies that will give you a competitive advantage.
Section 4: Sales and Marketing Plan
Design a marketing and sales strategy. Here is where you can plan out your comprehensive marketing and sales strategies to cover how you plan on selling your product. Before working on your marketing and sales plan, you will need to have your market analysis completely fleshed out and choose your target client personas, i.e., your ideal customers. Talk about the competitive landscape. Describe how you intend to entice customers to buy your products or services, including advertising and promotion, sales and distribution, pricing strategy, and post-sales support.
Section 5: Ownership and Management Plan
Outline all operations and management roles. This section describes the ownership, legal structure, and your business's management and staffing requirements. Use this section to outline your company's unique organizational and management structure. Describe how your company is organized, including its legal structure (sole proprietorship, partnership, corporation); identify any special licenses or permits your business operates with; provide a brief bio of key managers within your company; include an organization chart.
Section 6: Operating Plan
The operating plan outlines your business's physical requirements, such as office, warehouse, retail space, equipment, inventory and supplies, and labor. For a one-person, home-based consulting firm, the operating plan may be short and straightforward. However, for businesses such as restaurants or manufacturers that require custom facilities, supply chains, multiple employees, and specialized equipment, the operating plan may need to be very detailed.
Section 7: Financial Plan
This section is the most crucial part of the business plan, especially if you need debt financing or want to attract investors. The financial plan must demonstrate your business' growth and profitability potential. To do this, you will need to provide projected income statements, cash flow statements, and balance sheets. For new businesses, these are forecasts. A golden rule of thumb is to underestimate revenues and overestimate expenses. Outline your financial model, including your business costs, revenue projections, and a funding request if you pitch to investors. Your start-up cost refers to the resources you will need to get your business up and running — and an estimate of how much each of those resources will cost.
Section 8: Appendices and Exhibits
Summarize the above with an appendix. The appendices and exhibits section should contain any detailed information needed to support other areas of the plan, including company brochures, resumes of key employees, a list of business equipment, copies of press articles and advertisements, pictures of your business location and products, any applicable information about your industry or products, key business agreements such as lease, and contracts.
Who Needs a Business Plan?
Start-up Businesses : The most classic business planning scenario is for a start-up, for which the plan helps the founders break down uncertainty into meaningful pieces, like the sales projection, expense budget, milestones, and tasks. When you realize you do not know how much money you need or when you need it without first laying out projected sales, costs, expenses, and payment timing, the need becomes apparent. And that is for all start-ups, whether they need to convince investors, banks, or family and friends to part with their money and fund the new venture. Existing Businesses : Established businesses use business plans to manage and steer their business strategies to address changes in their markets and take advantage of new opportunities. They often use plans to reinforce strategy, establish metrics, track results, manage responsibilities and goals, plan and manage critical resources such as cash flow, and set regular review and revision schedules. Business plans can be a powerful driver of growth for existing businesses.
Finding the Right Plan for You
Considering that business plans serve diverse purposes, it is no surprise that they come in various forms. But before you even start writing your business plan, you need to think about who the audience is and your plan's goals. While there are standard components found in almost every business plan, such as sales forecasts and marketing strategy, business plan formats can differ depending on the audience and business type. For example, if you are building a biotech firm plan, your plan will detail government approval processes. If you are writing a restaurant plan, details about location and renovations might be critical factors. The language you would use in the biotech firm's business plan would be much more technical than the language you would use in the restaurant plan. Plans can also differ significantly in length, detail, and presentation. Those that never leave the office and are used only for internal strategic planning and management may often use more casual language and might not have much visual polish. On the other end of the spectrum, a plan destined for a top venture capitalist's desk will have a high polish and focus on the business' high-growth aspects and the experienced team to deliver desirable results.
Elements of a Business Plan
While the plans may vary by type, certain key elements appear in virtually all business plans. These components include the review schedule, strategy summary, milestones, responsibilities, metrics (numerical goals that can be tracked), and basic projections. The projections include sales, costs, expenses, and cash flow. These core elements grow organically for the actual purpose needed for the business.
Developing a High Power Business Plan
The business plan development process described here can provide the guidance entrepreneurs require for developing a business plan best suited for their needs; a high power business plan.
The Stages of Development
There are six stages involved in developing a high-power business plan.
Essential Initial Research
This stage requires you to analyze the environment in which you anticipate operating at each of the societal, market, industry, and firm levels of analysis. In this planning stage, the essential initial research is a necessary first step for better understanding the trends that affect their business and their decisions to lay the groundwork for and improve their potential for success.
Business Model
Inherent to any business plan is a description of the entrepreneur's chosen business model that will best ensure success. Based upon your essential initial research of the setting in which you anticipate starting your business (your analysis from stage one), you should determine how each element of your business model might fit together to improve the potential success of your business venture. These elements include their revenue streams, cost structure, customer segments, value propositions, key activities, and key partners.
Initial Business Plan Draft
This stage involves taking the knowledge and ideas developed during the first two stages and integrating them into a business plan format. A suggested approach is to create a complete draft of the business plan with all the sections, including the front part with the business description, values, vision, mission, value proposition statement, a preliminary set of goals, table of contents, and lists of tables and figures set up using the software features enabling their automatic generation. Writing all the operations, human resources, marketing, and financial plans as part of the first draft ensures that all these necessary parts can be appropriately integrated. The business plan should tell the story of a planned business start-up in two ways: using primarily words, along with charts and graphs in the operations, human resources, and marketing plans, and through the financial plan. Both approaches must tell the same story.
Making Business Plan Realistic
The first draft of a business plan will seldom be realistic. As you write the plan, it will naturally change as new information is gathered. Another factor that commonly renders the first draft unrealistic is the difficulty in ensuring that the written section—in the front part of the plan and the operations, human resources, and marketing plans—tells the same story as the financial part does. This working stage involves making the necessary adjustments to the plan to make it as realistic as possible.
Making Plan Appeal to Stakeholders and Desirable to the Entrepreneur
A business plan can be realistic without appealing to potential investors or other external stakeholders, such as suppliers, employees, and needed business partners. It may also be realistic and possibly appealing to stakeholders without necessarily being desirable to the entrepreneur. During this stage, try to keep it as realistic as possible when adjusting the plan to appeal to potential investors and yourself.
Finishing the Business Plan
The final stage involves putting all the essential finishing touches on the business plan so it will present well to potential investors and alike. This step involves ensuring that the math and links between the written and financial sections are accurate. It also involves ensuring that all the needed corrections are made to the formatting, spelling, and grammar. The ultimate set of goals should be written to appeal to targeted readers and reflect what the business plan specifies. An executive summary should be written and included as the final step.
FAQs about Business Plans
What are the 4 types of business plans.
1. Mini-plan : A mini-plan may comprise one to 10 pages and include at least cursory attention to such critical matters as business concepts, financing needs, marketing plans, and financial statements, especially cash flow, balance sheet, and income projections. It is a great way to quickly test a business concept or measure the interest of a potential partner or minor investor. It could also serve as a valuable prelude to a full-length plan later on.
2. Working Plan : A working plan is a tool to operate your business. It should be lengthy in detail but may be short on presentation. As with a mini-plan, you can probably afford a somewhat higher degree of candor and informality when preparing a working plan.
3. Presentation Plan : If you take a working plan, with its low stress on cosmetic appeal and impression, and twist the lever to boost the amount of attention paid to its visual appearance, you will end up with a presentation plan. This plan is suitable for showing to financiers, investors, stakeholders, and others outside the company.
4. Electronic Plan : Most business plans are composed on a computer, then printed out and presented in hard copy. However, more and more business information transferred between parties only on paper can now be sent electronically, so you may find it convenient to have an electronic version of your plan available. An electronic plan can be useful for presentations to groups using a computer-driven overhead projector, for instance, or for satisfying the demands of discriminating investors who want to delve deeply into the underpinnings of complex spreadsheets.
What are the 3 main purposes of a business plan?
1. Establish a business focus : The primary purpose of a business plan is to establish your plans for your business's future. These plans should include goals and milestones alongside detailed steps on how the business will reach each step. Creating a roadmap to your goals will help determine your business focus and pursue growth.
2. Secure funding : One of the first things private investors, banks, and other lenders look for before investing in your business is a well-researched business plan. Investors and stakeholders want to know how you operate your business, revenue and expense projections, and how they will receive a return on their investment.
3. Attract executives : As your business grows, you will likely need to add executives to your team. The business plan helps you attract executive talent and determine whether they are a good fit for your company.
What are the 5 elements of a business plan?
1. Business concept : Describes the business, its products/services, and the market it will serve. It should point out exactly what will be sold, to whom, and why your business will hold a competitive advantage.
2. Financial features : Highlights the important financial points of the company, including sales, cash flows, profits, and return on investment.
3. Financial requirements : Clearly state the capital needed to start the business and expand. It should detail how capital will be used and the equity that will be provided for funding. If the loan for initial capital is based on security instead of equity, also specify the source of collateral.
4. Current business position : Furnishes relevant information about the business, its legal form of operation, the principal owners, when it was formed, and key personnel.
5. Major achievements : Details of any developments within the company essential to the business's success. Major achievements include patents, prototypes, location of a facility, any binding contracts that need to be in place for product development, or any test marketing results.
Take your first step to becoming an entrepreneur by downloading our special guide for entrepreneurs.
About The Author
Daniel plays a fundamental role in WSI’s global franchise expansion and development. He has since overseen WSI’s franchise development process, and he is personally associated with the recruitment of 600+ global franchisees.
Featuring the Best in Career Advice, Digital Marketing and Franchising
The WSI Franchise Blog is your ideal place to get career advice and best practices for digital marketing from WSI experts!
Don't Stop The Learning Now!
Here are some other blog posts you may be interested in.
How to Create Work-Life Balance as a Franchisee
Are you looking for a better work-life balance? Inside this guide, you will discover how WSI franchisee, Taylor Russell, gets it right!
Get Your E2 Visa and Move to the USA
The Future of Digital Marketing: 5 Predictions for 2019
830 Dixon Road, Etobicoke ON, Canada, M9W 6Y8
Local : 905.678.7855 US Toll-Free : 888.678.7588 UK Toll-Free : 08.08.234.6105 Fax : 905.678.7242 Email : [email protected]
- High-Growth Industry
- Purpose-Driven Brand
- Powerful Franchise Network
- Awards & Client Success
- Contact WSI Head Office
- Proven System
- Training & Support
- Marketing & Brand
- Solution Delivery
- Licensing & Fees
- Resale Opportunities
- Visit the Blog
- Discovery Process
- Discovery Center
- Request Franchise Info
- Agency Program
- Get our Entrepreneur Guide
- Take our Self-Assessment Test
© 2023 WSI. All rights reserved. WSI ICE and WSI IM are registered trademarks of RAM. Privacy Policy and Cookie Policy . Each WSI Franchise is an independently owned and operated business.
An official website of the United States government
Here’s how you know
Official websites use .gov A .gov website belongs to an official government organization in the United States.
Secure .gov websites use HTTPS A lock ( Lock A locked padlock ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.
5 reasons you need a business plan
If you are starting a small business, there is no shortage of advice on the steps you should take: registering your business name, getting a Tax ID, deciding on a business structure and applying for the needed permits and licenses. While these are all very important steps to take, a business plan will be central to how you start, grow and develop your business.
Here are 5 reasons why you need a business plan:
1. It will help you steer your business as you start and grow. Think of a business plan as a GPS to get your business going. A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan like a GPS for how to structure, run, and grow your new business. It’s a way to think through and detail all the key elements of how your business will run.
2. It’s not as hard as you think. A business plan is a written tool about your business that projects 3-5 years ahead and outlines the path your business intends to take to make money and grow revenue. Think of it as a living project for your business, and not as a one-time document. Break it down into mini-plans – one for sales and marketing, one for pricing, one for operations, and so on.
3. It will help you to reach business milestones. A well-thought-out business plan helps you to step back and think objectively about the key elements of your business and informs your decision making as you move forward. It is essential whether you need to secure a business loan or not. Keep in mind that the plan does not have to be like an encyclopedia and does not have to have all the answers.
4. It can help you get funding. Business plans can help you get funding or bring on new business partners. Having one in place will help investors feel confident that they will see a return on their investment. Your business plan is the tool you will use to persuade others that working with you (or investing in your business) is a smart decision.
5. There’s no wrong way to write a business plan. There is no right or wrong way to write a business plan. You can pick a plan format that works best for you. What’s important is that your business plan meets your needs. Most business plans fall into one of two common categories: traditional or lean startup.
Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. Traditional plans tend to require more work upfront. Lean startup business plans are less common, but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan. They can take as little as one hour to make and are typically just one page.
Because knowing where to start can be challenging, the SBA has tools to help make writing a business plan less intimidating and time consuming. The SBA offers a Business Plan Tool that helps simplify the process. The tool consists of eight easy-to-follow steps to help create a well-prepared plan.
To learn more about putting your business plan together, go to the SBA’s online Learning Center and take the self-paced course on How to Write a Business Plan . The course explains the importance of business planning, describes the components of a plan, and provides access to resources and sample plans. You can also take a look at the SBA’s Business Planning Guide for more information and to view business plan templates.
If you want a more hands-on approach, you can get assistance from an SBA resource partner to help complete your business plan. Working with a mentor or counselor from SCORE , a Small Business Development Center or a Women’s Business Center can help with all aspects of starting, growing or expanding your business.
About the author
U.s. small business administration.
The SBA works to ignite change and spark action so small businesses can confidently start, grow, expand, or recover.
Sign up for our newsletter for product updates, new blog posts, and the chance to be featured in our Small Business Spotlight!
The importance of a business plan
Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.
Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.
What is a business plan?
A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.
Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success.
Why is a business plan important?
A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.
Business plans typically include detailed information that can help improve your business’s chances of success, like:
- A market analysis : gathering information about factors and conditions that affect your industry
- Competitive analysis : evaluating the strengths and weaknesses of your competitors
- Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
- Marketing: using your research to advertise your business
- Logistics and operations plans : planning and executing the most efficient production process
- Cash flow projection : being prepared for how much money is going into and out of your business
- An overall path to long-term growth
10 reasons why you need a business plan
I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.
The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.
To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.
1. To help you with critical decisions
The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.
Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.
Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.
Send invoices, get paid, track expenses, pay your team, and balance your books with our free financial management software.
2. To iron out the kinks
Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.
3. To avoid the big mistakes
Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.
According to data from CB Insights , some of the most common reasons businesses fail include:
- No market need : No one wants what you’re selling.
- Lack of capital : Cash flow issues or businesses simply run out of money.
- Inadequate team : This underscores the importance of hiring the right people to help you run your business.
- Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
- Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.
The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!
Get a jumpstart on your business plan by creating your own cash flow projection .
4. To prove the viability of the business
Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.
Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.
A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.
Want to prove there’s a market gap? Here’s how you can get started with market research.
5. To set better objectives and benchmarks
Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.
6. To communicate objectives and benchmarks
Whether you’re managing a team of 100 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 questions any time there’s an absence. 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.
Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.
7. To provide a guide for service providers
Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.
8. To secure financing
Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.
Learn what you need to get a small business loan.
9. To better understand the broader landscape
No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.
10. To reduce risk
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.
Understanding the importance of a business plan
Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.
Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.
Related Posts
Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.
The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.
Godfrey Legal
Our Focus Is Your Business
Call Today!
- 407-890-0023
- Office Location
Why a Business Plan is Important for Entrepreneurs
With anything you set out to do in life, it’s a good idea to have a plan. This same advice holds true when you start your own business .
A business is a risky venture. You can make a lot of money, you can break even or you can lose a lot of money. Every entrepreneur has high hopes for a profitable venture, but sometimes a closer look shows that your business might succeed after all.
A business plan is a chance to evaluate your business. You will get a closer look at how you propose your business will be organized, the financial situation of the business and smaller details, like marketing and planning a budget. You get to see every aspect of your business at once.
A business plan can help you clarify your goals and see if your idea will be profitable in the long run. Plus, you’ll be able to foresee problems you may experience down the road. While writing the business plan, you may examine various areas and see that the business is actually not going to be profitable. This will help you save time and money in the long run.
What is in a Business Plan?
A business plan outlines your plans for the various aspects of the entrepreneur’s proposed business. It may include information about human resources, marketing, finances, operations and intellectual property. It is essentially a document that outlines sub-plans for each area of business. If the goal of the business plan is to obtain a loan, then it will focus primarily on finances and ways you plan to raise money.
Why Do You Need a Business Plan?
A good business plan can help you accomplish the following:
- Determine how much money you will need to start up your business and keep it operational
- See if you can make a decent profit from your business
- Convince investors, banks and other lenders to loan you money
- Define your market—determine how your customers will be and what percentage of the market share you will be able to reach
- Find out what your competition lacks
- Develop an effective marketing strategy
- Foresee future problems
Raising Money
The primary goal of a business plan is to raise money. Therefore, your plan should focus on how will business will work and what you will be spending money on. It should be well-researched and well-written if you want an investor to back you up financially. Investors want to see your future goals and how you see your company in the future, so include a cash flow projection and profit and loss analysis. Plus, a study showed that start-ups with a business plan raised twice as much money as those that didn’t.
Learn More About Drafting a Business Plan
A business is a significant undertaking. You need to start with a business plan that will outline what you hope to achieve in the end. You wouldn’t build a house without plans, so why would you start a business without one?
If you’re considering entrepreneurship, Godfrey Legal business firm in Orlando can help you get started on the right foot. With more than three decades of experience, we can help you draft a viable plan so your business venture has the greatest chance of success. Contact us at (407) 890-0023 today for a consultation.
entrepreneur.com/article/74194
inc.com/articles/201107/5-reasons-why-you-need-a-business-plan.html
- February 2023
- January 2023
- December 2022
- November 2022
- Business Acquisition
- Business Formation
- Business Contracts
- Business Leasing
- Business Purchase Sale
- Business Start Ups
- Commercial Real Estate
- Commercial Retail Lease
- Construction Contract
- Construction Development Contracts
- Domain Name Website Transactions
- Foreign Investor
- Franchising Your Business
- Inspections
- Intellectual Property
- Letter Of Intent
- Liquor License
- Mergers and Acquisitions
- Non Disclosure Confidentiality Agreement
- Non-Compete Agreements
- Sole Proprietorship
- Trademark And Copyright
© 2017 - 2023 Godfrey Legal. All rights reserved. This law firm website & legal marketing is managed by MileMark Media.
20 Reasons Why You Need a Business Plan in 2023
- Written by Dave Lavinsky
What is the purpose of a business plan and why are business plans so important? Below are our top 20 reasons why you need a business plan.
2. To establish business milestones. The business plan should clearly lay out the long-term milestones that are most important to the success of your business. To paraphrase Guy Kawasaki, a milestone is something significant enough to come home and tell your spouse about (without boring him or her to death). Would you tell your spouse that you tweaked the company brochure? Probably not. But you’d certainly share the news that you launched your new website or reached $1M in annual revenues.
3. To better understand your competition. Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages. And if you don’t currently have competitive advantages, to figure out what you must do to gain them.
Finish Your Business Plan Today!
Quickly & easily complete your business plan: Download Growthink’s Ultimate Business Plan Template and finish your business plan & financial model in hours.
4. To better understand your customer. Why do they buy when they buy? Why don’t they when they don’t? An in-depth customer analysis is essential to an effective business plan and to a successful business. Understanding your customers will not only allow you to create better products and services for them, but will allow you to more cost-effectively reach them via advertising and promotions.
5. To enunciate previously unstated assumptions. The process of actually writing the business plan helps to bring previously “hidden” assumptions to the foreground. By writing them down and assessing them, you can test them and analyze their validity. For example, you might have assumed that local retailers would carry your product; in your business plan, you could assess the results of the scenario in which this didn’t occur.
6. To assess the feasibility of your venture. How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture. In some cases, the result of your planning will be to table the venture. And it might be to go forward with a different venture that may have a better chance of success.
7. To document your revenue model. How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model. And upon reading your plan, others may suggest additional revenue streams to consider.
8. To determine your financial needs. Does your business need to raise capital? How much? One of the purposes of a business plan is to help you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital for business and for effectively employing the capital. It will also enable you to plan ahead, particularly if you need to raise additional funding in the future.
9. To attract investors. A formal business plan is the basis for financing proposals. The business plan answers investors’ questions such as: Is there a need for this product/service? What are the financial projections? What is the company’s exit strategy? While investors will generally want to meet you in person before writing you a check, in nearly all cases, they will also thoroughly review your business plan.
10. To reduce the risk of pursuing the wrong opportunity. The process of creating the business plan helps to minimize opportunity costs. Writing the business plan helps you assess the attractiveness of this particular opportunity, versus other opportunities. So you make the best decisions.
11. To force you to research and really know your market. What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace. And it will allow you to use this knowledge to make decisions to improve your company’s success.
12. To attract employees and a management team. To attract and retain top quality talent, a business plan is necessary. The business plan inspires employees and management that the idea is sound and that the business is poised to achieve its strategic goals. Importantly, as you grow your company, your employees and not you will do most of the work. So getting them aligned and motivated will be key to your success.
13. To plot your course and focus your efforts. The business plan provides a roadmap from which to operate, and to look to for direction in times of doubt. Without a business plan, you may shift your short-term strategies constantly without a view to your long-term milestones. You wouldn’t go on a long driving trip without a map; think of your business plan as your map.
14. To attract partners. Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. Establishing partnerships often requires time and capital, and companies will be more likely to partner with your venture if they can read a detailed explanation of your company.
15. To position your brand. Creating the business plan helps to define your company’s role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners. With the industry, customer and competitive insight you gain during the business planning process, you can best determine how to position your brand.
16. To judge the success of your business. A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).
17. To reposition your business to deal with changing conditions. For example, during difficult economic conditions, if your current sales and operational models aren’t working, you can rewrite your business plan to define, try, and validate new ideas and strategies.
18. To document your marketing plan . How are you going to reach your customers? How will you retain them? What is your advertising budget? What price will you charge? A well-documented marketing plan is essential to the growth of a business. And the marketing strategies and tactics you use will evolve each year, so revisiting your marketing plan at least annually is critical.
19. To understand and forecast your company’s staffing needs. After completing your business plan, you will not be surprised when you are suddenly short-handed. Rather, your business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother expansion. Importantly your plan can not only help you understand your staffing needs, but ensure your timing is right as it takes time to recruit and train great employees.
20. To uncover new opportunities. Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business. It’s coming up with these ideas and executing on them which is often the difference between a business that fails or just survives and one that thrives.
What is a Business Plan?
A business plan is a document that details your business concept and strategy for growth.
What is the Purpose of a Business Plan?
A business plan helps guide your company's efforts and, if applicable, gives investors and lenders the information they need to decide whether or not to fund your company. A business plan template helps you to most easily complete your plan.
Why Do You Need a Business Plan?
A business plan provides details about your company, competition, customers and industry so that you make the best possible decisions to grow your company.
What is the Importance of a Business Plan?
The 3 most important purposes of a business plan are 1) to create an effective strategy for growth, 2) to determine your future financial needs, and 3) to attract investors (including angel investors and VC funding ) and lenders.
Why is a Business Plan Important to an Entrepreneur?
Business plans help entrepreneurs take their visions and turn them into tangible action plans for success.
About Growthink
Since 1999, Growthink’s business plan experts have assisted more than 4,000 clients in launching and growing their businesses, and raising more than $2.5 billion in growth financing.
Need help with your business plan?
Speak with a professional business plan consultant from our team.
Use our simple business plan template .
Check out our business plan examples .
Or, if you’re creating your own PPM, you can save time and money with Growthink’s private placement memorandum template .
Learn more about us via our Growthink Business Plan Review page
The World’s #1 Business Plan Template
Would you like to know the quickest and easiest way to create a winning business plan?
And how to use it to raise funding, improve your strategy, or both?
Well, we’ve developed the ultimate business plan template to help you do this. Simply click below to learn more.
Other Helpful Business Plan Articles & Templates
Popular Posts
Business Plan Template & Guide
How to Write a Business Plan for Raising Venture Capital
20 Reasons Why You Need a Business Plan
Business Plan Help Center
How to Write a Business Plan
Business Plan Examples Our Business Plan Outline Business Plan Format Tips
Components of a Business Plan
Recent Posts
2022 Venture Growth Funding Report
November 2022 Venture Growth Funding Recap
Blog categories.
- Business Planning
- Entrepreneurship
- General Business
- Transaction Strategy
Date: March 7, 2023 | Readers: 397,000 Articles: 647 · Website Value: USD$6,052,050
'Business knowledge is money, wealth and power'
How Business Plans Assist Entrepreneurs?
BUSINESS MANAGEMENT , BUSINESS ORGANIZATION and ENTREPRENEURSHIP
Are business plans useful or not?
The business plan is important to a new and existing businesses as it gives the business a sense of purpose and direction . It sets out the resources required by the business such as finance, the number and skills of workers needed, and how the goods and services will be marketed to consumers. The objectives and financial forecasts provide the business with targets to aim at and enable the business to monitor its progress.
This document is often used to persuade lenders to finance a business proposal . It is used to also reassure financial lenders such as banks, microfinance providers and venture capitalists that the entrepreneur has comprehensively researched the business idea and has given solid reasons to support his business venture. Therefore, it helps financial insitutions to make a more objective judgement regarding the firm’s likely success and hence its ability to repay the loans.
Preparing a business plan is not just something a business needs to do only at the start-up stage. A business plan is also important for the planning and development of existing businesses. A current business plan may also be needed when a business wants lenders or investors to provide finance for expansion, or other long-term projects.
A good business plan includes a list of product features and benefits to help improve sales revenue . If you know the benefits of your products, you can improve your sales by telling customers how your products make their lives easier or more enjoyable. Remember that features are mostly the physical properties of products or services (e.g. material, color, size, weight, etc.), and some other properties such as style and quality. But benefits are the positive effects of these features on the customer.
A good business plan also identifies who your best customers are . It describes in details who would buy your product and why, and describes them in terms of age, gender, income, how they spend their time, what they enjoy doing, what other products they consume, etc. All these details describe the lifestyle of your customers. The features and benefits of your product must suit the lifestyle of your customers.
The business plan can also be used by other stakeholders such as investors (shareholders) to conduct Investment Appraisal – to assess the potential gains from their investment in the business. Investors will assess both quantitative and qualitative opportunities and risks that may be reflected in a business plan before making any decisions to invest. They will also look for potential problems with the business venture, even if these are not outlined, or are hidden, in the document.
A business plan plan also identifies the main competitors of your business. It explains the way in which each of these businesses tries to be competitive. It answers questions for each competitor such as what are their strengths? Or, what do they do well? What are their weaknesses? Or, what do they do badly?
Can you outline any other benefits of having a business plan?
You can find more resources about business plans by visiting U.S. Small Business Administration .
CATEGORIES: BUSINESS MANAGEMENT , BUSINESS ORGANIZATION AND ENTREPRENEURSHIP
- benefits of business plans
- features of a business plan
- reasons for preparing a business plan
- should entrepreneurs write business plans
- Why is the business plan important?
Hi! I am Jerry. I am the owner and Editor-in-Chief of this website. I am experienced Lecturer and Researcher in Business Management, Head of Business and Economics, and IB Examiner for DP Business Management at International Baccalaureate (IB). I am 35-years-old. I live with my family in China. I make business education accessible to everyone in the world by providing high-quality business resources for CEOs, directors, business managers, business owners, investors, entrepreneurs, business journalists, business teachers and business students. MORE »
0 Comments so Far. Be the First One!
Leave a reply cancel reply.
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Please turn on JavaScript in your browser
It appears your web browser is not using JavaScript. Without it, some pages won't work properly. Please adjust the settings in your browser to make sure JavaScript is turned on.
Nine reasons why you need a business plan
Building a great business plan helps you plan, strategize and succeed. Presented by Chase for Business .
Making the decision to create a new business is an exciting yet stressful experience. Starting a business involves many tasks and obstacles, so it’s important to focus before you take action. A solid business plan can provide direction, help you attract investors and ensure you maintain momentum.
No matter what industry you plan on going into, a business plan is the first step for any successful enterprise. Building your business plan helps you figure out where you want your business to go and identify the necessary steps to get you there. This is a key document for your company to both guide your actions and track your progress.
What is the purpose of a business plan?
Think of a business plan like a roadmap. It enables you to solve problems and make key business decisions, such as marketing and competitive analysis, customer and market analysis and logistics and operations plans.
It can also help you organize your thoughts and goals, as well as give you a better idea of how your company will work. Good planning is often the difference between success and failure.
Here are nine reasons your company needs a business plan.
1. Prove your idea is viable
Through the process of writing a business plan, you can assess whether your company will be successful. Understanding market dynamics, as well as competitors, will help determine if your idea is viable.
This is also the time to develop financial projections for your business plan, like estimated startup costs, a profit and loss forecast, a break-even analysis and a cash flow statement . By taking time to investigate the viability of your idea, you can build goals and strategies to support your path to success.
A proper business plan proves to all interested parties—including potential investors, customers, employees, partners and most importantly yourself — that you are serious about your business.
2. Set important goals
As a business owner, the bulk of your time will mostly likely be spent managing day-to-day tasks. As a result, it might be hard to find time after you launch your business to set goals and milestones. Writing a business plan allows you to lay out significant goals for yourself ahead of time for three or even five years down the road. Create both short- and long-term business goals.
3. Reduce potential risks
Prevent your business from falling victim to unexpected dangers by researching before you break ground. A business plan opens your eyes to potential risks that your business could face. Don’t be afraid to ask yourself the hard questions that may need research and analysis to answer. This is also good practice in how your business would actually manage issues when they arise. Incorporate a contingency plan that identifies risks and how you would respond to them effectively.
The most common reasons businesses fail include:
- Lack of capital
- Lack of market impact or need
- Unresearched pricing (too high or low)
- Explosive growth that drains all your capital
- Stiff competition
Lack of capital is the most prevalent reason why businesses fail. To best alleviate this problem, take time to determine how your business will generate revenue. Build a comprehensive model to help mitigate future risks and long-term pain points. This can be turned into a tool to manage growth and expansion.
4. Secure investments
Whether you’re planning to apply for an SBA loan , build a relationship with angel investors or seek venture capital funding, you need more than just an elevator pitch to get funding. All credible investors will want to review your business plan. Although investors will focus on the financial aspects of the plan, they will also want to see if you’ve spent time researching your industry, developed a viable product or service and created a strong marketing strategy.
While building your business plan, think about how much raised capital you need to get your idea off the ground. Determine exactly how much funding you’ll need and what you will use it for. This is essential for raising and employing capital.
5. Allot resources and plan purchases
You will have many investments to make at the launch of your business, such as product and services development, new technology, hiring, operations, sales and marketing. Resource planning is an important part of your business plan. It gives you an idea of how much you’ll need to spend on resources and it ensures your business will manage those resources effectively.
A business plan provides clarity about necessary assets and investment for each item. A good business plan can also determine when it is feasible to expand to a larger store or workspace.
In your plan, include research on new products and services, where you can buy reliable equipment and what technologies you may need. Allocate capital and plan how you’ll fund major purchases, such as with a Chase small business checking account or business credit card .
6. Build your team
From seasoned executives to skilled labor, a compelling business plan can help you attract top-tier talent, ideally inspiring management and employees long after hiring. Business plans include an overview of your executive team as well as the different roles you need filled immediately and further down the line.
Small businesses often employ specialized consultants, contractors and freelancers for individual tasks such as marketing, accounting and legal assistance. Sharing a business plan helps the larger team work collectively in the same direction.
This will also come into play when you begin working with any new partners. As a new business, a potential partner may ask to see your business plan. Building partnerships takes time and money, and with a solid business plan you have the opportunity to attract and work with the type of partners your new business needs.
7. Share your vision
When you start a business, it's easy to assume you'll be available to guide your team. A business plan helps your team and investors understand your vision for the company. Your plan will outline your goals and can help your team make decisions or take action on your behalf. Share your business plan with employees to align your full staff toward a collective goal or objective for the company. Consider employee and stakeholder ownership as a compelling and motivating force.
8. Develop a marketing strategy
A marketing strategy details how you will reach your customers and build brand awareness. The clearer your brand positioning is to investors, customers, partners and employees, the more successful your business will be.
Important questions to consider as you build your marketing strategy include:
- What industry segments are we pursuing?
- What is the value proposition of the products or services we plan to offer?
- Who are our customers?
- How will we retain our customers and keep them engaged with our products or services and marketing?
- What is our advertising budget?
- What price will we charge?
- What is the overall look and feel of our brand? What are our brand guidelines?
- Will we need to hire marketing experts to help us create our brand?
- Who are our competitors? What marketing strategies have worked (or not worked) for them?
With a thoughtful marketing strategy integrated into your business plan, your company goals are significantly more in reach.
9. Focus your energy
Your business plan determines which areas of your business to focus on while also avoiding possible distractions. It provides a roadmap for critical tradeoffs and resource allocation.
As a business owner, you will feel the urge to solve all of your internal and customers’ problems, but it is important to maintain focus. Keep your priorities at the top of your mind as you set off to build your company.
As a small business owner, writing a business plan should be one of your first priorities. Read our checklist for starting a business, and learn how to take your business from a plan to reality. When you’re ready to get started, talk with a Chase business banker to open a Chase business checking or savings account today.
For Informational/Educational Purposes Only: The views expressed in this article may differ from other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.
JPMorgan Chase Bank, N.A. Member FDIC. Equal Opportunity Lender, ©2022 JPMorgan Chase & Co
IMAGES
VIDEO
COMMENTS
A business plan is a very important and strategic tool for entrepreneurs. A good business plan not only helps entrepreneurs focus on the specific steps
A business plan is essential as an entrepreneur. It helps you set clear goals and guidelines for how you will manage your business.
Writing an entrepreneur business plan can help you think deeply about your business and the strategic steps you will take to achieve your goals.
A business plan forces you to get realistic and look at your numbers. This document often helps people to see where their real challenges and obstacles lie
Business plans can help you get funding or bring on new business partners. Having one in place will help investors feel confident that they will
A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the
A business plan can help you clarify your goals and see if your idea will be profitable in the long run. Plus, you'll be able to foresee
A business plan helps guide your company's efforts and, if applicable, gives investors and lenders the information they need to decide whether or not to fund
The business plan is important to a new and existing businesses as it gives the business a sense of purpose and direction. It sets out the
A business plan helps your team and investors understand your vision for the company. Your plan will outline your goals and can help your team make decisions or