Do you have a small business set up or a startup idea? Are you thinking about approaching outsiders to support your business?
Perhaps you are not convinced that a business plan is necessary. Here are ten reasons why business plans benefit you and your business:
1. Present Your Business Idea
Irrespective of how good a communicator you are, you will never be able to communicate your business vision as successfully as a business plan that is perfectly put together. The business plan gives you a clear understanding of what you want to do and gives you a clearer way to express your ideas.
2. Convince The Business Viability
A business plan will help to convince you and the investor of the viability of the project. There’s nothing like having all the facts to clarify the key issues before you. Even if you’re not looking for an outside investor just yet, the business plan should be able to convince YOU that the business idea is worth pursuing.
3. Get Clarity
The obstacles to success are never so apparent with several ideas swimming in your head. A mind that is buzzing and full of ideas never gets clarity. A business plan will force you to write down your thoughts in an orderly way. This could result in you going in a completely different direction than you originally thought, or even giving up your idea.
If the thought of changing or giving up on your original idea is considered bad, which one would you prefer? Losing your hard capital or the opportunity to reconsider your idea?
4. Monitor Your Progress
The business plan is a great way to monitor progress against the objectives you have set yourself. You could also set milestones in your business plan so you can monitor your business better. You’ll be able to see if you’re moving away from your original vision, so you’ll know what needs to be put right.
5. Uncover With Market Research
By writing down your ideas, it may make you realise that you need to do more research on the demand for your product or service, including competitor research. Additional research could prevent a costly mistake or even reveal a hidden benefit that you haven’t seen previously.
6. Estimate Your Resource Requirements With A Cash Flow Forecast
A business plan will help you estimate on how much resources you need to make an idea work. In your mind you may have an estimate of what you need but until you make a cash flow forecast, you may not know that you’ll need funding for an extended period of time.
7. Develop Your Strategy
What problems do you solve for your customers? In your business plan you build your business strategy from a set of questions. 1) what is the problem, 2) what is the solution, 3) who is your target market, and 4) what is your business identity
8. To Reduce Risks
Starting a business is no child’s play. Statistically, only half of small businesses are still in business five years later. While there are many reasons why businesses fail, risks are manageable if they are identified and planned ahead, and the process of writing a business plan helps with identifying risks and creating steps to mitigate these risks.
9. A Business Plan To Help You Get Funding
Banks can turn down requests for loans iff the bank manager doesn’t have enough details about your company, and business strategy. He has to understand the business in order to approve the loan. SImilarly, a startup needs to outline their vision and business strategy to potentinal investors. A business plan will enable the funder to make the right decisions which will help him authorize a loan approval for your company or invest in your company.
10. Understand Your Business Entirely
Once you finish writing your business plan, you will understand your business better: the environment it operates in, its strengths and weaknesses,, what could potentially go wrong, and what you can do to ensure your success. Doing a back of an envelope planning is not sufficient to achieve this level of understanding.
The difference between having a business plan or not could be a difference between success or failure, and this is due to having planned ahead, and understand the business environment, as well as your own strengths and weaknesses.
Farah Ishak is a Content Writer at Halalop. She grew up in the United Kingdom where she obtained her Bachelor’s degree in Management. Later, she completed her MBA and held senior-level positions in Malaysian based MNC. She left the corporate world to be with her young kids. She is passionate about issues concerning Muslim women, Startups and Muslim businesses in general.