Learning & Insights
Why you need a business plan
While some say that making a business plan is outdated, many still agree it has huge benefits—especially for small businesses. Here are five reasons you need a business plan.
1. It requires you to establish goals and measure progress
A written business plan isn't just a tool to set goals and objectives for your business but also a way to measure your progress in reaching them.
What do you want to accomplish in the next year? How do you plan to achieve it?
Write everything down so you can make sure you’re moving in the right direction. And make sure everyone working at your business knows the goals and measurements. That way, you’re all on the same page. Then you can celebrate successes or adjust if you fall short.
2. It keeps you focused
A business plan helps you stay focused on your business goals and objectives. You’ll clearly describe your business, what it does, the competition and your plans for the coming year (and beyond).
So whether you’re meeting with potential investors or putting together promotional material, you always have the same message and know you’re moving in the right direction. Revisit your business plan regularly to help you stay accountable to your original plans—and make adjustments where necessary for future success.
3. It helps you define your market
One of the most difficult things to define is who your business serves.
What does your market look like? What’s unique about your business? Do you offer something needed in the market you defined?
Research your market to make sure you serve the right customer at the right time—and then write it down so you can stay in line with who you are and what you want to accomplish.
4. It points out potential obstacles to overcome
When you put together a business plan, you must consider obstacles that may prevent you from accomplishing your goals. By outlining potential difficulties that you may run into ahead of time, you’ll be better prepared to respond appropriately. You may also recognize an obstacle early enough to respond before it impacts your business.
5. It helps attract money
A clear and compelling business plan will allow you to approach investors with confidence because you’ll already have a plan for the funds mapped out.
Additionally, if you’re considering a business loan, many financial institutions require a business plan as part of the application process (depending on the amount and type of loan needed).
Start making a plan
Though your business plan will likely change as your business progresses, having a roadmap for reference has many benefits. If you’re concerned you can’t create a business plan on your own, there are free online tools you can use, or you may want to hire a consultant to help you create something unique to your business.
However you choose to create a business plan, the key is to think it through and write it down. Once you put a plan in place, you should start to see its benefits.