5 Reasons a Business Plan is Important
The Value of a Business Plan
While many business owners recognize that a business plan is important, they often don’t realize just HOW important it is. While having a business plan cannot guarantee success, for some businesses it can make the difference between success and failure.
To make sure that you get the most out of your business plan, here is a list of ways to help you determine the real value of a comprehensive business plan. A condensed version of a solid business plan is all that you’ll need! For startups, however, a solid business plan can help build the foundation for a successful future.
1) Shows how your business will make money. The bottom line of business is to make money. Business plans are designed to help express this purpose in financial and analytical ways, and to show prospective business partners and investors how their money will be spent and when to expect a return on their investment. If convincing investors is a necessary part of the success of your businesses, don’t skimp out on this essential element.
2) Determines your future financial plans. Well-written business plans can help forecast future financial needs. While nothing is certain, knowing at least where to take your business for it to be successful is a good start in the right direction.
3) Outlines spending. Resources, especially when economies are tight, may be few and far between. 
Knowing how best to spend scarce resources is important for the longevity of any business. Business plans help to outline essential spending needs when money is tight.
4) Demonstrates how you will avoid pitfalls. Poor planning often causes the death of many great ideas. In order to ensure that your business ideas do not result in failure, a business plan can help keep a business on target and ensure that you’re spending money efficiently to keep things moving. A business plan can also help you delineate ideas and work through some of the potential pitfalls before you or others make big investments of time and money.
5) A Business Plan is a Necessity for Startups
Most funding sources won’t even consider making an investment these days without one. The reasons are clear – businesses that take the time to build a solid business plan are more apt to stay on target and spend wisely as the business grows. There is plenty of time later for fancy upgrades and improvements; when starting out, it is best to think small and grow large.
- Update the plan periodically. While a business plan may be a necessary component of success for many businesses, don’t think of it as a one-time affair. Business plans should be re-addressed annually and updated based on new circumstances and fiscal realities. Using a business plan as an organizational road map helps ensure long-term success and keep leaders focused on the mission, goals, and long-term growth of the business.
- Lay out the marketing plan. A comprehensive business plan includes marketing projections. Research data can help leaders identify and focus on target markets and the best ways to reach them. Businesses should keep a keen eye on demographic changes and update their business plans regularly to keep up with trends.
- Provide direction for business leaders. A business plan can help channel resources in terms of both time and money. This focused direction helps ensure success by helping leaders capitalize on expenses to meet long-term goals.
- Lay the foundation for future business decisions. Don’t forget to consider a business plan as an indispensable business tool for future product and service plans. Business plans help leaders stay aligned on the best decisions for today, tomorrow and well into the future.
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- Show your business is serious about success. Having a formal business plan says a lot about how seriously a company takes its business. For investors, consumers, and potential business partners, this means that business leaders recognize the company’s potential for success and are serious about fostering an environment that will help it to grow. Consider these players when developing a business plan for a complete and rounded business approach.
Whether your company sells products, services or both, the type of business products or services you provide will also determine how your plan is structured and how much content it should include. In general, a good business will not succeed or fail based on the information provided in a business plan; however, a business plan can help you become successful through focused planning and forethought.
Ultimately, you are the one running the show so you need to have a clear understanding of the business. Business plans are a time-consuming, intricate element that requires extensive market research. It requires some specialized knowledge to put together a logical model. First, check your presumptions; the Internet cannot tell you everything, especially whether your business plan is attractive to an investor.
If you are seeking help in writing a business plan for your small business, our consultants here at BizCentral USA know exactly what is required to write one. We’ll help you understand your market, demographics, financials and other key factors in the business planning process at a low cost to help you save time and money. Visit our website here to learn more, we will give you a FREE marketing review!
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