Top 3 Reasons to Write Business Plans

Whether you’re a new or established business, or a non-profit organization, writing a business plan can be one of the most helpful things you can do for your business. Obviously there are different types of business plans depending on the nature of your company or organization. It’s not enough that you have a “hunch” that your new venture will be a smashing success, or that you believe your latest website. Idea 2.0 is a sure-fire “ten bagger” for the lucky venture capitalist. There are people who need to take a close look at their business plan; be it you, internal management or outside investors. In this article, we’ll look at the top three reasons to write business plans.

First to answer the question: “Is the business feasible?”

Before committing funds, manpower, and time to start a business, it’s helpful to do a “running drill” to see if the venture you have in mind has a good chance of success. The business planning process forces you to look at what your competitors are doing and ask how you can differentiate your product or service. We usually call this a SWOT analysis: Strengths, Weaknesses, Opportunities, and Threats. At the same time, you want to identify, as clearly as possible, your unique selling proposition. This can be a special feature or something unique about your brand. Just be different and attractive in the eyes of your target market. Going through this process will give you a better idea of ​​your chances of success in the marketplace.

Then look at your projected finances: do you have the funds to start your business? Where are you going to raise the capital? How soon will the business break even? All of them are relevant questions.

Second, a business plan is used to help obtain loans from banks or financing from outside investors. Typically, if you are a new business, you will have a very difficult time getting financing from your local bank unless you have collateral, regardless of whether you have a written plan or not. If your business has been established for several years and has a healthy cash flow, then the bank will definitely want to look at your financials before giving you loans or bridge financing.

If you are looking for angel or venture capital investment, then what they will require is a business plan, particularly the executive summary. What is most important to these investors, more than the plan itself, is the track record of the entrepreneur and the strength of their management team. Be sure to include these important points in your bplan.

Last but not least, a written business plan must be constantly evolving. It acts as a blueprint to guide management in executing business strategy and meeting objectives. By constantly reviewing and updating the plan, it is used as a useful communication tool within the company to guide business growth.

We have seen some good reasons to write business plans. Now, if you think you don’t know how to write one, help is available. Find a template online, such as at the site below. Or better yet, get business plan software. The good ones, like Business Plan Pro 2007, are easy to use and will guide you through entering the necessary text and numbers and generate a complete plan for you. There is absolutely no reason why a business person should not have a draft business plan.