A good Business Plan is essential for raising funds for your new business venture. This is quite clear. The importance of a well-thought-out Business Plan for you, the entrepreneur, is often not fully appreciated. The following paragraphs show why a good Business Plan is so important for your success.
Covering All Bases
A good Business Plan contains a 360-degree review of all aspects of your initiative – R&D, Marketing, finance, HR etc. While preparing it, chapter after chapter, you will attain a clearer and more concrete sense of the challenges you will be facing. You will also discover conflicts and discrepancies in your initial assumptions. For example, your business model may assume second year sales of 100,000 products across 3 different regions, but your marketing budget may be relatively small and staffing plan only provides for 2 sales reps. While preparing your Business Plan you will realize there is a gap between the results you expect and the resources you intend to commit.
Covering All Contingencies
When you first envision your new business or product, the future looks bright and success seems to be just around the corner. Reality is, of course, much more challenging and your Business Plan will help you prepare for the different contingencies you might face. Simple yet effective tools like SWOT analysis assist you in mapping out your Strengths and Weaknesses (which every business has) and prepare for the Opportunities and Threats you may encounter. While you can always expect the unexpected, preparing for different scenarios and planning how you will respond to each one, are sure to help you.
Who Your Up Against
While your idea might be truly brilliant and innovative, you will not be alone – there will be competition. In fact, the existence of competition means that there is a real need and a market for your idea. An important part of your Business Plan is identifying your competition, both direct (products that do exactly the same) and in-direct (products and services that cover the need in a different way). A through survey of the competition will help you understand what sets you apart from all the other solutions out there. You may even discover that you need to return to the drawing board in order to make sure your design has unique benefits and advantages over competing products.
Recruiting a Winning Team
Academic research has shown that a winning team is critical for the success of any business venture. Beyond your vision and your leadership skills, good people will join you if they are presented with a solid Business Plan that shows them how you intend to achieve your goals. Similarly, potential business partners and suppliers will need to understand how they fit in your strategy. Sharing your Business Plan is an excellent way of getting them on-board.
An Evolving Document
Like any document, your Business Plan will reflect a moment in time, the moment you complete it. While it will serve you well along the way, showing you where you have side-tracked from your planned course of action, the plan itself will always need adjusting. Circumstances change, and your estimates and assumptions will either prove to be realistic, optimistic, or pessimistic. As your business evolves, your Business Plan needs to evolve with it, reflecting the new circumstances and the steps you intend to take in-order to address the new challenges the future holds.