A business plan is considered a useful tool and a needed part of applying for loans. It shows any potential lender that you understand your what your market is all about, know your customer, can generate revenue to make timely payments and have a contingency plan should something happen unexpectedly.
However, because so many business owners are now finding financing outside normal banking channels, does it make sense to go through the exercise of drafting a business plan if your lender doesn’t require one? It might even be fair to ask, “If it doesn’t help me get a loan why should I spend the time and effort to write one?”
The truth is, a business plan is essential to the success of any business. Even only a one-pager with a few financial projections can be a very precious internal tool. A business plan is a roadmap for even the earliest or smallest-stage idea. It can foster alignment. Set the pitch for the business and also help you craft the message for your brand.
There are many reasons why you need to write a business plan even if you are not applying for a bank loan. A few are discussed below:
The most important reason for establishing a business plan irrespective of your purpose is to help you stay organized and maintain the track. Companies that do not have a business plan can easily veer off the lane, and the revenues will suffer from it. Creating a plan with spending projections, income forecasts and more can help businesses stay on track for a long time.
Many ideas sound good on paper and even in discussions. A simple calculation, however, can make or break an idea. Before introducing it, you should at least develop a financial model to project the return on investment from various realistic situations. You can save plenty of time and disappointment by thinking about the numbers and making sure that you can achieve your profit goal.
Creating a business plan is an ideal way to ensure that all of you align all your founding team members with the company’s future and present plans. In the initial phase of a business, it is essential that all founders are on the same side, as they will work together to lead the business successfully.
Business plans are a valuable and interactive document, which you can use as a benchmarking tool. Where did you exceed your business’s expectations? In what areas is it possible that your strategy is short? Although it is good to “swing” your business based on what you have seen in the market. If you have written down your plan, you will be held accountable for the performance of your business.
Know Your Message
Business planning is incredibly helpful in describing what you do, understanding who your competitors are, and developing a realistic three to five-year plan. Each of these activities is crucial when you want to start or expand your business. And creating a value proposition is essential to your business no matter what stage you’ve attained.
Hold Yourself Accountable
A business plan is an excellent tool with which business owners can express their vision and future plans for their business. When using a business plan format. There are standard questions that require you to think and create a long-term vision and strategy for your idea. Once on paper, they can be used as a guide to track your progress and take responsibility for the future.
Iron Out Possible Kinks
Developing a business plan will enable you to think things through. Your plan should call into question the validity of your ideas, the target markets for products/services, etc. It should force you to do your proper diligence.
When you write a business plan, it forces you to think more clearly about what you are doing and where you are going. By putting things down on paper, you get to identify the strengths and weaknesses. You get to see the areas that need focused attention and improvement. Think of it as a roadmap.
Until next time,
To Your Growth & Profits
William De Temple, CEO Antirion LLC
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