Posted on 15/08/2018 in Business

Is a "Business Plan" Essential or Necessary?

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Are you trying to prepare a business plan for your venture? A business plan is one of the most critical documents for any enterprise. The owner, executives and/or managers typically use it for internal planning. Also, it is helpful as it is a basis for a loan application from financial institutions such as banks. It is an important document used to persuade the investors to buy into your business idea. Consequently, it is a good justification of decent investment for many stakeholders. On its own, a business plan is worth nothing but it a clear indication that a start-up firm has put much thought into what it means to run a business. It is a road map to the future as it makes business owners and entrepreneurs think through their ideas, evaluate business concepts, identify their business limitations, and prevent a variety of mistakes.

Situations that Require a Business Plan

Business plans have a variety of uses in a company. They include internal planning and forecasting, getting funding for ongoing expansion or operations, planned spin-offs and divestiture, and reorganizing or restructuring of a business.

For internal planning, it provides a blueprint for the operations of the entire company. It allows measuring of the company’s progress and performance against planned goals involving expenditures, sales, strategic direction, and time frame.

Once you identify a potential risk area in the business, you can incorporate contingency plans and proposed solutions into the business plan. The document also covers marketing opportunities together with future financial requirements that need management attention.

Finally, a business plan is a primary source of information to potential buyers of the company, its product line, or part of its division. As with outside investors and lenders, the document provides them with verifiable facts and projections of the firm.

Why Do You Still Need a Business Plan in 2018 and beyond?

A business plan is essential as it helps you to prioritize. A thoughtful and complete business plan is among the most valuable tools to assist you in realizing the firm’s long-term goals. It gives your organization direction, maps out plans to achieve the goals, defines your objectives, and helps you manage risks in the company.

Making a business plan helps you work out the variety of goals you desire to attain and the strategies to achieve them. The planning process allows you to identify potential risks and establishes a plan on how to manage them if they occur.

Once you have prepared a business plan, it is essential to update it regularly, to remind yourself of the objectives and priorities. More importantly, updating the document assists you in assessing whether the strategies are working. It will also enable you to adapt to changes in the business environment, such as technology.

Another reason to have a business plan is that it will give you control over your venture. It will help you identify business ideas and insights working for your firm and the areas you need to improve. For instance, in the planning process, you can seek feedback from your employees on possible ideas and improvements. 

In conclusion, a business plan is an essential document required to run a successful and scalable business.

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