Why Do I Need A Business Plan?
Business Plans Are Important
Benjamin Franklin said it best, “By failing to prepare, you are preparing to fail.” Sounds like Benjamin Franklin was a fan of making a plan.
But before we dive into what a business plan is, let’s start with what it isn’t. A business plan is not about sticking to strict self-imposed rules. Having a business plan does not mean narrowing your creativity and imagination. You do not need to know how every detail of your final product will look before you make a business plan.
It’s about giving yourself a starting point, and a place to refer to when you want to grow.
Make the Plan before Pursuing the Vision
A business plan is absolutely essential if you wish to communicate ideas to potential investors or customers. No one can read your mind, but if you can present your ideas in a logical format, you can reduce misunderstandings and ensure that every person involved is on the same page. Your business plan is the master document that tells the world what kind of progress you are making.
Coming up with great ideas is easy, and having a great idea does not make you an entrepreneur. What separates the wolves from the sheep is the attention to detail. This is the part where most great ideas fail to materialize. Making balance sheets, cash flow statements, and market analyses is tedious work. These mundane tasks may seem easy to procrastinate or set aside when you would rather see progress on the main product.
90% of startups fail. What separates the 10%?
You might be sitting there wondering “Why do I really need to make a business plan?” You have thought about what you are going to do over the next few weeks. You made a schedule and understand the product or service you will sell, and you’re ready to make it happen.
A Business Plan is a Master Document
Well it is more than just a guideline for your new company. It’s the master document that tells the world you are making some kind of progress.
David Barker, Director at 4D Data Centres talks about mitigating risk, but recommends not overthinking each and every possible problem. “Risk in a business should always be considered when writing the business plan. However, especially in the early stages, it can be tempting to spend far too much time looking at every possible risk and then trying to mitigate them all.”
Be sure to make your document as long or as short as you need for your audience. The goal is to convey meaning to the people who will use it most.