Business plans: what they are and why you need them
A series of three articles will explain how to write a good business plan. In this first article we will focus on what business plans are and why you need one. The second article will focus on the characteristics of a good business plan. And in the third one, finally, we will discuss the sections to go in it – and what should go into each one…
You’ve identified a new business opportunity – and you’re pretty excited about it. But before you start trying to make it a reality, you need to make sure it’s viable. That’s where a business plan comes in.
WHAT IS A BUSINESS PLAN?
It’s a written document that sets out what your business opportunity is and how you are going to monetise it. It helps you structure your idea, develop it and set steps to implement it. Every business plan is different – but generally, they include financial details, market analysis, competitor information and customer information. A business plan can be a tool for presenting your idea to others – like potential partners or investors – to help them understand and buy into it.
Business plans are essential for entrepreneurs looking to launch new ventures. Existing businesses also use them to develop new products or services, enter new markets, launch new business models or create new channels.
So why do you need one?
TO CRITICALLY ASSESS YOUR IDEA
When you set out your idea, outline a process for developing it and analyse the opportunities and risks it presents, you can assess if it’s something worth pursuing before you commit too much resource to it. If you don’t make a plan and go with gut feel instead, you are more likely to come up against bumps in the road.
Of course, in today’s fast-changing, complex business environment, no one can predict the future. You’ll need to be ready to adapt or change course if needed – which is why your plan should be flexible and concise. But by planning, you’ll at least be aware of some of the challenges you may face – and prepare for them.
TO ATTRACT INVESTMENT
If you’re looking to fund your new opportunity, any bank, venture capital firm or other potential partner will almost certainly ask to see your business plan. They’ll want to make sure you understand the opportunity you’re presenting, that you’re serious about it and that you’ve done your homework. Your plan needs to convince them that your idea is viable – and worth investing in.
TO KEEP YOU AND YOUR TEAMS ON TRACK
A business plan acts as a roadmap for your teams. It keeps you focused on your objectives and is something you can refer to and check progress against and a tool to plan future activities. Remember, a plan is just that – a plan. To turn it into a success, you have to execute it.