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- It helps you when taking a loan
- It helps you grow your business fast
- You can make big spending decision confidently
- You can determine vital cash flow challenges earlier
- A business plan helps minimize your risks
- It acts as a solid foundation for your strategic planning
- It enables you to achieve goals and milestones
- A business plan acts as an asset to sell
If you want to start a business, would you need a business plan? Do you find it worth investing your time and resources in a business plan? Would you prefer to wing and skip that planning process?
Having that in mind, it’s upon you to decide what you want – either a business plan or not. Before choosing not to have a business plan, let’s look at some business plan benefits.
It helps you when taking a loan
If you want to start a business but you need financial help, a business plan is vital. You can use it to approach money lending institutions such as banks. Moreover, you can ask for a venture capitalist or angel investor for funding. These individuals have to look at what you plan to sell and understand your business’s trajectory better.
A business plan must not be 200 pages document to look helpful to lenders. It should be a simple plan that shows the problem in the market and what you plan to solve. It should also include essential forecasts and critical financial statements.
On the other hand, a good business plan should be simple for supporters and financial lenders to understand your business model. You can present data through graphs or charts without forgetting to buy Spotify plays.
It helps you grow your business fast
The other reason why you need to have a business plan is to help you grow fast. A business plan isn’t about having a document that predicts the future of that business accurately. You have to write and review it regularly to have a better window to achieve your goals. You can also have a chance to make changes in how you learn about customers.
Studies have reported that those companies that review their results frequently grow 30% faster. And you can check these results with the help of a business plan. Moreover, research also reported that such companies having a business plan perform better. They aren’t part of the awful business failures or experiencing cash flow crises threatening to close them down.
You can make big spending decision confidently
When you start a business, you aim at its growth. In the process, you will experience some problems such as hiring new employees, expanding to new areas, or making more significant new purchases.
To make such significant spending decisions while viewing your business forecast regularly, that’s mapped in your business plan gives you better information you can use to make better decisions.
You can determine vital cash flow challenges earlier
Apart from spending, the other thing to do is monitoring and understanding the cash flow. This is a significant factor in a business plan – which includes the income statement and balance sheet.
You need to review the cash flow statement regularly because it’s part of the business plan. It helps you discover potential cash flow challenges and can take necessary action. This helps avoid future crises such as not able to pay your bills.
A business plan helps minimize your risks
If you are establishing a business, there are numerous things you won’t be knowing. Some of these include your competitors, customers, and even operations. As an entrepreneur, you will have signed up for these uncertainties after starting a business. However, there are lots of things you need to do to reduce the risks.
The most significant way to do things is by creating and reviewing a business plan. It will help you uncover some of your weak spots like assumptions you make, gaps or flaws. By doing so, you can develop contingency plans for your business.
It acts as a solid foundation for your strategic planning
Having a business plan helps you map how your revenue goals and sales fit in your expense budget. This draws a clear connection between the money you invest and the results you achieve to ensure you set up everything for success.
In addition, a business plan can help everyone to be on the same page. It can explain things in simple terms on how to get your company where you want.
A business plan can allow members of your team to understand the goals and see the big picture. If everyone in the group knows their specific role in the company, it will help them meet their goals because it’s part of their work, and that matters to them.
Additionally, you can have digestible reports easy to share with the team to know how things are going. If you have such transparency, it will help you plan and prioritize connecting the dots on your technical work to generate revenue.
It enables you to achieve goals and milestones
If you have a good business plan, it helps to outline your goals and milestones. In this, smart goals refer to measurable, specific, relevant, time-based, and achievable.
When creating a business plan, don’t forget to include goals and milestones. If you don’t, your business plan will be less valuable. Setting goals and milestones for the team and business that are not articulated in the program will give you a hard time aligning your team.
You can use your business plan to help you set higher-level milestones. Later, use these milestones and create a guide for your sales and meaningful goals.
A business plan acts as an asset to sell
It may come a time when you feel that it’s right time you sell your business. You may also position for acquisition. If you have equipped yourself with a solid business plan helps to make it a higher valuation. The company will be worth the buyer when they understand the target market, potential growth, and business model.
It’s essential to have a business plan. Reviewing a business plan will be more than goal setting and simple planning. So, the vital thing for you is to start writing one for your business. When you have a business plan, it’s easy to understand whether your idea is workable or not.
Thank you for reading!