As a new business owner, it can be difficult to understand what a business plan is much less whether or not you need one. A business plan is essentially a document that explains your full business on paper—from your vision and goals to your financials. Here are the two main reasons you should have a business plan.
1. Investment Seeking
Whether you are seeking funding from a bank (like a loan) or from an investor, a business plan is going to be your first step. No one is going to hand over money to a business without knowing what it is, what it plans to do, and what it could be worth. Fortunately, a business plan will outline all of those things, and a good business plan will help you establish the credibility necessary to secure the funds you need.
2. Clarity, Accuracy, and Organization
Since you interact regularly with your business, you might feel like you have everything figured out, but if you cannot clearly articulate what your business is and how it does what it does, then it is not likely that anyone else will either. A business plan can help you outline the key concepts and fundamentals of your business because it includes a(n)
management team summary
financials statements and projections
Without creating a business plan, these are all things that you've probably thought about individually, but it is very beneficial to have everything outlined in one complete file. As a new business owner, there is a lot to juggle, and it is easy to overlook things like competitor analysis when you are busy focusing on your own business; however, if you're opening a massage business and have determined that your business could make $100,000 per year based on market and industry trends, your plan could completely fail if you haven't noticed that there are 5 other massage parlors within 8 miles of your suggested location that all use the same approach. A business plan can help you focus on all of the important things to ensure that you don't forget anything vital to the success of your company.
Even if you do not plan to seek any investments, it is still a good idea to create at least a basic business plan for your own records. This will also give you something to look back on and update throughout your business's lifetime to ensure that you are always on track with your own expectations and predictions. To grow your business, you must know your business, and a business plan can help you do exactly that.
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