Reasons Why You Need To Prepare A Business Plan For Small Business

A business plan is a written document that sets out the future of your business. A comprehensive business plan helps entrepreneurs to identify their opportunities and establish their objectives, while also preventing the tendency of focusing on the short-term at the expense of long-term goals.

In this post, we review the aspects of Reasons Why You Need To Prepare A Business Plan For Small Business, importance of a business plan to an entrepreneur, what is the importance of a business plan, and what are four importance of a business plan.

Reasons Why You Need To Prepare A Business Plan For Small Business

A good business plan is essential for any small business owner. It helps you know where you’re going and how to get there, and can help make your startup more attractive to investors or banks. It’s also often required by the government if you want to secure funding for your new venture. But how do you go about writing a good small business plan?

A business plan can help you secure funding for your startup, or expand your operation.

A business plan can help you secure funding for your startup, or expand your operation. It’s a written document that describes in detail how a new business is going to achieve its goals. A good business plan will also include information about the market opportunity and the competition, as well as financial projections for three years down the road. This will give investors and other key connections confidence in your ability to deliver on what you say, which makes it easier for them to support you with their money or advice when needed.

Depending on what type of financing you’re looking for—such as venture capital (VC) or angel investment—a potential investor may ask to see some sort of formal presentation before making any kind of commitment. These presentations generally take place during meetings at which several people are present so they can discuss specific details as well as answer questions from everyone there at once rather than having one-on-one sessions with each prospective partner individually.”

A business plan is a roadmap for your business that outlines goals and details how you plan to achieve these goals.

A business plan is a roadmap for your business that outlines goals and details how you plan to achieve these goals. It’s the most important document you’ll ever write, because it sets out your plans for the future, helps you focus on what’s important, and makes it easier to make decisions when things change.

Many people think that writing a business plan is hard work or takes a lot of time. But if you follow these simple steps and use our template, it shouldn’t take more than an hour or two at most! All you need is some free time (and maybe some coffee).

What should be in my small business’ business plan? It depends on what kind of information will help others understand your small business better. For example:

Your business plan should include an overview of the kinds of advertising you plan to spend money on.

Your business plan should include a marketing plan that details how you will promote your company. This may come in the form of advertising, promotional activities and public relations campaigns. Your budget can also be included in this section.

Include a marketing strategy describing your target market as well as the competition and how you will compete with them.

A business plan is a written document that describes in detail how a new business is going to achieve its goals.

A business plan is a written document that describes in detail how a new business is going to achieve its goals. It should include an overview of the kinds of advertising you plan to spend money on, as well as how much you think each type will cost.

The first thing you need to do before writing your own business plan is figure out what kind of company you want to start as well as what type of products or services it will sell. Do some research into similar companies that have been successful and see how they were able to grow so rapidly in such little time; this will help you come up with ideas for your own business plan!

You can also use your business plan to help convince banks, investors and other key connections to support you.

As well as helping you to organize your business plan and make sure you’ve covered all the bases, it can also be a great tool for convincing banks and other financial institutions to support your startup.

When you’re looking for funding from investors or from a bank, a good business plan will demonstrate that your startup is going to be a success. A poor one won’t help at all – so spend time putting together one that shows off what makes your startup special and why it deserves financing.

If you want a loan or investment from an investor or bank, it’s important that they feel confident about lending their money to your company. If there are any doubts in their mind about whether or not their investment is safe, then they might not lend anything at all!

The task of writing a business plan can feel overwhelming, but it doesn’t have to be.

A business plan is a formal document that outlines the goals and objectives of your company. It also serves as a guide to make important business decisions in the future.

By preparing one before you start your venture, you will be able to take advantage of all the benefits that come with it. However, preparing this document may seem like an overwhelming task especially if you’re starting out on your own or are new in the field. To help you get started on writing yours, here are some tips:

  • Use templates – There are many templates available online that can help guide you when creating one. You can also ask friends and family to help; they might know a few tricks of their own!
  • Use software – There are many software programs out there specifically made for planning purposes so don’t hesitate to use them!
  • Take advantage of those books – Books written specifically about how-to’s regarding business plans will definitely come in handy!

Having a clear business plan makes it easier to track progress toward your goals.

Having a clear business plan makes it easier to track progress toward your goals. You can measure how much money you’re making and compare it with your budget, which will tell you if you need to change things. For example, if you have a goal of bringing in $50,000 in revenue this year but only managed to bring in $15,000 so far, that might signal that there are issues with one of the steps outlined in your plan or that there is something wrong with the entire plan itself.

It also allows you to see how far along the path toward success you have come, as well as how much further there is still to go. It gives businesses an idea of what they might look like at certain milestones or benchmarks along their journey toward success—and how much closer they are getting each day by following through on their plans (or not).

As long as you cover the essentials: less is more.

As long as you cover the essentials, less really is more.

If you’re using a business plan template, it can be easy to get hung up on all the extra information that isn’t relevant to your business. It might seem like there are a million things you need to include in order for the plan to be comprehensive and complete, but if your primary objective is funding then spending too much time on other matters could prove costly. Instead of trying to create an exhaustive document from scratch or having multiple drafts before getting one final version that meets your needs perfectly (which may never happen), focus on just getting something written down so that investors can see what kind of person/company they would be investing in and get excited about it. Once this happens, go back through and refine what needs refining; if there are major issues with any part of your plan then starting over from scratch might actually be easier than trying to fix them during revisions!

Having a proper small business plan can improve the chances of your small business surviving in the longer term

A business plan is a roadmap for your business that outlines goals and details how you plan to achieve these goals. It should be written in a way that makes it easy for investors or other interested parties to understand what you have planned for the future of your company, as well as why they should help you achieve those plans.

A good small business plan will include information on what resources are needed, who is going to provide them and how much they cost. It may also include information about the competition in this field and how this will affect sales figures.

importance of a business plan to an entrepreneur

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:

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:

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!

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.

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.

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.

what is 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:

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:

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!

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.

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.

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.

benefits of a business plan

Make a Go/No Go Decision

Perhaps the single most essential advantage of a business plan is using it to convince yourself whether the prospective business is actually a good idea. The plan is a good place to test assumptions about what business conditions will be needed to make the entity a success. Realistic modeling with the plan is good way to decide whether there is a reasonable chance of success, or whether it makes more sense to try some other business idea.

Focus on Strategy

A business plan should be based on a vision for how the firm positions itself within the market. This is useful for deciding whether the products and services to be offered match its market positioning.

Set Priorities

The process of creating a business plan is useful for identifying which priorities are most critical for ensuring that the goals set forth in the plan will be accomplished. This is useful for allocating money and other resources to the right activities.

Align Tactics with Strategy

The activities stated in the business plan should represent the best possible tactics to support the firm’s strategy. By laying out tactics within the business plan, one can evaluate whether there are any areas requiring more or different tactics. This format also makes it easy to decide whether there are any mismatches between the firm’s strategy and its tactics.

Set Milestones

A business plan should contain milestones, noting that goals that are expected to be completed by specific dates. For example, a new product should be released by March 15, or orders should be received from five new customers by June 30, or the western sales region should be opened up by September 1.

Review the Supporting Structure

Having a business plan makes it easier to see if you have considered every aspect of a business, and whether each area adequately supports the others. For example, are there enough sales people to generate the sales listed in the plan? Has enough fund raising been budgeted to ensure that the cash will be available to build that new warehouse? Is the engineering group being given enough resources to develop the new product line that launches in the third quarter?

Assign Responsibility

With a business plan in hand, it is easier to work through the list of activities that must be completed, and assign responsibility for them. This is essential for figuring out which employees are effective and which are not.

Identify Cash Flow Issues

A business plan contains a cash flow analysis, which is useful for determining when the business is expected to have cash flow problems. Having this information available makes it easier to plan for fund raising activities to ensure that the business is always properly funded.

Impress Outsiders

Since a new company does not have any financial statements yet, many lenders and creditors will want to see a business plan instead. This will give them some comfort regarding how realistic the firm’s prospects for success may be. This is especially important when trying to attract new investors, who want as much detail as possible before they will be willing to invest any money.

Analyze Variances

With a business plan in place, it is easier to spot instances in which actual performance is better or worse than expected performance. Depending on how the plan is structured, it may be possible to identify variances each month, allowing for ongoing changes to the business to bring its results into closer alignment with the plan.

Create Metrics

A business plan may include a set of performance metrics that represent how well the organization is expected to do during the planning period. These metrics should be targeted at just those performance issues that really matter, such as the percentage of visitors to the company online store that complete a purchase, or the proportion of goods sold that are returned by customers.

Parting Thoughts

 It is worth returning to the “make a go/no go decision” that we listed as the first advantage of a business plan. This concept is worth considering on an ongoing basis as a business starts up, in order to evaluate how it is doing. For example, if several months have passed and there is still no immediate prospect of generating a profit, it might be worthwhile to compare this outcome to the expectations outlined in the plan, to see if there are any options available for turning the situation around. If not, it may be time to shut down the business, rather than running out of cash further in the future and then closing it down.

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