Why and How You Need to Write Good Business Plans
Writing a business plan is not only an important first step for creating a business; it is also essential to obtaining funding for your new business as well as ensuring that you are able to complete required assessments satisfactorily. Unfortunately, far too many entrepreneurs start a business with little or no business plan and never develop an accurate plan to follow. Without a plan, most new businesses fail to meet their financial objectives. A business plan serves as the road map and outline for a business; therefore, without proper planning, there is no road map to success.
Writing a business plan can be daunting if you are unfamiliar with this task. Many people mistakenly believe that they need to completely re-invent the wheel in order to create a business plan. However, there are a number of templates available on the internet that provide structure to help you create a good roadmap for your small business. In addition, these templates provide you with both a generic outline and specific steps that you can easily customize to create your own unique roadmap. Additionally, most templates provide ready-made sections for financial objectives, market analysis, and business projections.
A well-formulated formal business plan helps you attain financing by providing you a clear road map that the investors can follow. By clearly outlining your financial obligations, you are able to attract funding from a variety of financing sources. If you have done your homework, you know that most angel investors, venture capital, banks, and other sources of private funding require a well-formulated road map in order to be impressed enough to give you a second look.
The third major benefit to having a well-formulated business plan is the creation of milestones. As you progress through your business planning process, you will identify possible obstacles to completing specific tasks. One of the easiest ways to overcome obstacles is to set up milestones. In essence, you can break down the project into sub milestones (task-related). By breaking down the project into manageable chunks, you become more effective and efficient as you move forward with the business planning process.
By establishing milestones along the business plan, you are providing investors with a clear picture of how you are achieving your goals and developing plans to achieve them. In addition, most formal business plans provide for a Management Overview, which is usually the first page of the full document. In this section, you can provide additional information on your business, including why you are writing the plan, what you hope to achieve with it, and what you will do to achieve those goals.
In conclusion, there are many benefits to creating well-formulated business plans. Perhaps most importantly, a well-formulated business plan provides a road map for investors. Angel investors and venture capitalists are not convinced by just a single investment in a new business. Thus, good business plans create an opportunity to attract more investments, even as you develop a strong foundation for that new business.