Why You Should Write a Business Plan Even If You Don’t Require Outside Funding
There are two primary schools of thought when it comes to starting a business. One, is to jump into action and adjust as time goes on. The other, is to thoroughly plan and consider your business before fully launching. If you are seeking outside funding, a business plan is almost always required and is one of the best ways to formally make your business case. However, if you are not seeking funding, the choice to write a business plan is completely up to you.
One could pull from numerous examples of businesses subscribing to either method that have been successful. So, why bother writing a business plan if you are not seeking outside funding?
First, Harvard Business Review conducted a study of over 1,000 entrepreneurs and found that having a business plan increases a company’s chance of success. This is just one of many studies that suggest business plans are beneficial. Further, while your business plan need not be formal, it essentially becomes your roadmap. Most importantly, it forces you to examine many vital elements that you may not fully consider without going through the process of writing them down.
Below are some of the key reasons to write a business plan, along with some of the core business considerations you’ll work through when going through the process.
Cohesive Vision and Success Measurement
You can’t reach a goal if you don’t have a clear vision of what it is. This is true in any area of life, business or otherwise. Presumably, one of the primary goals of your business is to make money, but you need to consider how much and by when as well as balancing that with expected expenses.
In addition, what else is your objective beyond making a profit? For some businesses, profits are the only goal and there is nothing wrong with that but, if you have additional objectives, they need to be clearly mapped out. This includes setting reasonable milestones. A business plan is your roadmap to not only how your business will be run, but also how you will define and measure success.
A business plan may be the first time you put numbers on paper. Throughout the process you will figure out your likely costs, revenue, and at what point you will break even and reach different revenue milestones. This will lead to figuring out how much you need to charge for your product or service and how many customers or sales you need.
Competition & Market
These are other key areas that a business plan helps flesh out. While your business may have a tremendous idea or concept, it won’t do much good if there are other established players in the market offering the same thing. This helps you identify what unmet need your business concept is fulfilling or how it differs from what is out there.
Once you’ve thought through your business offering and researched your competition, it’ll naturally lead to considerations about your market. It’s easy to think that if you have a great product or service, customers will flock to you, but it is rarely that easy. You need to do your research to make sure a market exists to support your business. Thinking through this in detail can make or break your business.
Overall, a business plan ensures that you are reducing your risks. In business, you can’t plan for everything but, you can identify many of the risks that apply to your specific business long before a problem arises. Through the business planning process, you may determine that your concept as it exists is not feasible. This allows you to appropriately adapt or possibly even start from scratch, long before valuable time and money is wasted.
When you are ready to write your business plan, consider Joorney’s business plan writing services. With over 4,000 business plans written, we bring tremendous insight and expertise to the table. We will be able to tell you what’s great about your plan, and what may be missing. We can guide you through setting realistic business goals, ensure you’ve properly profiled the market and identified your key competitors, that your financial projections are realistic, and all other key considerations to help you start your business with the best chances of success.