December is officially “Draft A Business Plan Month” – and whilst the somewhat festive timing may appear odd initially, now is actually the perfect time to start thinking about your goals for the new year and how you can make 2020 your best year in business yet.
Not convinced? Here are five good reasons why you should write a business plan:
To Test the Feasibility of Your Business Idea
Writing a new business plan is the best way to test whether or not an idea for starting a business is feasible, other than just going out and doing it. In this sense, the business plan is your safety net; writing a business plan can save you a great deal of time and money if working through the business plan reveals that your business idea is untenable. Often, an idea for starting a business is discarded at the marketing analysis or competitive analysis stage, freeing you to move on to a new (and better) idea.
Unfortunately, many prospective business owners are convinced that their idea for a product or service is a “can’t miss” proposition, and don’t take the time to do the necessary research and work through a proper business plan. The more you know about your industry, your prospective customers, and the competition the greater the likelihood that your business will succeed.
To Give Your New Business the Best Possible Chance of Success
Writing a business plan will ensure that you pay attention to both the broad operational and financial objectives of your new business and the details, such as budgeting and market planning, and will make for a smoother startup period with fewer unforeseen problems as your business becomes established.
The exercise of budgeting and market planning will help you define your Target Market, your Unique Selling Proposition, optimum pricing strategies, and outline how you intend to sell/deliver your products to customers. In addition, developing a budget for implementation will assist with determination of your startup and operating capital requirements.
To Secure Funding, Such as Bank Loans or Equity Financing
Most new businesses need both startup and operating capital to get off the ground and without a well-developed business plan there is no chance of getting debt financing from established financial institutions such as banks or equity financing from angel investors (unless they happen to be family members or close friends).
And established businesses often need money, too, to do things such as buy new equipment or property, or because of market downturns. Having an up-to-date business plan gives you a much better chance of getting the money you need to keep operating or to expand.
Investors and financiers are always looking at the risk of non-repayment, and word-of-mouth is no substitute for written facts and figures in a properly prepared and well presented business plan.
To Make Business Planning Manageable and Effective
A business plan is essential if you’re thinking of starting a business, but it’s also an important tool for established businesses. Viable businesses are dynamic; they change and grow, and so company’s original business plan needs to be revised as new goals are set.
Reviewing the business plan can also help you see what goals have been accomplished, what changes need to be made, or what new directions your company’s growth should take.
To Attract Investors
Whether you want to showcase your business to venture capitalists or attract angel investors, you need to have a solid business plan. A glossy presentation may pique their interest, but they’ll need a well-written document they can take away and study before they’ll be prepared to make any investment commitment.
Writing a business plan is time-consuming, but it’s essential if you want to have a successful business that’s going to survive the startup phase – and if you’re already in business, but don’t have a plan, If your business doesn’t have one, maybe it’s time to start working on it. The process of writing a business plan can be a wonderfully illuminating process that will do wonders to clarify where you’ve been, where you’re going and how you can get there…
And if you need a hand to work through the process and put the plan together, click here for more information about Evans Entwistle’s business planning services,