Reasons to Write a Business Plan

1). To Gain A Deep Understanding Of Your Market:

Gaining a deep understanding of your target market is one of the most important reasons for writing
a business plan. A detailed business plan based on an in-depth market research would give you
comprehensive insights into the business you’re about to start. It would show you the potential
market size, known consumer behaviors, available competition, and a lot more.

A deep understanding of any market you’re venturing into is important to your success. And
preparing a business plan before you step a foot in, will give you a better head-start.

 
2). Grow Your Existing Business:
Existing businesses can make a business plan for the sole purpose of documenting new strategies
and reallocating resources to sprout growth. When a business feels it’s moving in the wrong
direction or not hitting its projected revenues, it could take a step back to the drawing board and
draw up a new plan to redirect the company’s affairs.

This technique is particularly helpful for businesses that have been experiencing a negative cash
flow for a while.

 
3). To Predict The Future:
A business plan can help you manage the direction of your business more efficiently.

Putting down your strategies, consumer insights, and more on paper would help you better forecast
where you plan to see your business in the near future. This will help you understand your business
better, and guide you in making related decisions that will hep you improve your business.

As you determine what route your business would take, existing and forecasted market trends would
give you a fair idea on if your plans would be effective on the long-run or not.

4). To Support A Loan Application:

Financial institutions like banks, micro-finance institutions, and certified money lenders will want to
see a business plan that shows if the loan they’re disbursing to your business would be recoverable
or not. Here, your business plan must show an impressive growth potential and must be completely
detailed.

 
5). To Secure Investments:
Just like financial institutions and professional money lenders, some investors want to know they’re
not throwing money into the thin air. They want assurances that their investments will pay off.
Since investments is highly competitive, investors will not just need a business plan, but would want
to see in-depth profit and loss statements, cash flow projections, balance sheets, and a whole lot
more.

 
6). To Better Manage Cash Flow:
Writing a business plan can help your business manage its cash flow better.

If the cash flow in any business is not properly monitored, the operations could go numb. Most
businesses fail not because of unprofitability, but because they were unable to control their debts
and general expenditure.

With an smartly written business plan, you can ensure your business focuses only on what matters,
and cuts out most expenses.

 
7). To Keep You Organized:
Writing a business plan will help you stay organized and on track. A good plan in a properly
organized business would lead to more revenues generated yearly.

Without a great plan, you could easily loose your focus, and your revenues would go on to suffer for
it.

 
8). To Establish Benchmarks & Milestones:
Writing a business plan is a way to set milestones for your startup.

By setting benchmarks, you can stay focused and work harder to attain your goals. Any business
without milestones set would be unable to truly measure its progress rate.

When goals are set, attained, set again, and attained again, your business can experience growth in
a good direction.

Using a business plan as a benchmarking tool would help you know where you’re exceeding your
expectations, where you have shortcomings and a whole lot more.

 
9). To Position Your Brand & Uncover New Opportunities:
Preparing a business plan can help you know where your business stands in the marketplace. This
is key to knowing how to better present your business to your target market, position you well
against your competition, and show you how to generally strive for growth.
During your market research process, you could also discover new business opportunities. Looking
at your business plan from different angles would give you a newer perspective on how to address
customers. This could show you problems consumers already face and how to solve them.

 
10). To Sell Your Business:
Before you can sell your business, you’d have to show growth progressions or regressions, income
statements, profit & loss statements, and more. These are crucial to determining what your business
is truly worth, and if your business is capable of growing beyond its current state.

A well-written business plan would show buyers and potential investors the true business opportunity
that’s theirs for the taking in your business.

1) Increase the Odds of Success

Building a business is something to be taken seriously. Tons of startups fail simply because the

business owners/managers fail to think things through before plunging into the unknown. We
don't want that to be you.

Business requires strategy, proper allocation of resources, refined approaches and squeaky-clean
priorities. If you want your business to succeed and grow over time, creating a business plan is a
no-brainer!

2) Secure Funding

Funding, funding, funding. Every business needs it and there never seems to be enough lying
around. Bottom line, you have almost ZERO chance of getting funds from traditional sources
like these without a thorough business plan:

1. Banks & Lending Institutions

2. Angel/Private Investors & Venture Capitalists
3. Crowd Funding Platforms like Kick Starter or Go Fund Me

All of these folks are going to want to see your business plan before they'll take you seriously.

Put yourself in this position, mentally: pretend you only have a week to prep your business plan
before presenting it to an angel investor who's ready to hand you six-figures of debt-free funding.
Would you feel confident in what you have to show them? Are you ready?

3) Valuation Purposes

You can’t know how much a business is worth at first glance. Maybe it seems to be doing great
on the outside, but the truth is in the numbers-- in its financial health.
This is why banks and investors don’t really care what comes out of your mouth, they just want
to see your business plan and skip to the numbers. How are things adding up? What’s the current
estimated value and the projected valuation over x number of years?

Your business plan should have all these questions answered, and laid out in a well-formatted
document with neat graphs, charts, snippets of info, etc.

4) Market Your Brand

A business needs a solid customer-base to grow, and in most cases you'll need to have a business
plan before you can gain a solid audience. You need to create a concrete, hardcopy roadmap to
guide you to your destination. Of course, there'll be plenty of unexpected obstacles to deal with
along the way-- but without the map, you’ll be completely lost.

A business plan will help you market your business by deepening your understanding of your:

 Marketing Budget
 Core Pitch & Value Propositions
 Targeting & Demographic Data
 Competition & Market Analysis

Unless you have an incredible photographic memory and mind-blowing IQ, odds are you can't
keep all this information organized in your mind-- especially if you're trying to run a business at
the same time. Modern business planning software is simply essential.

5) Communicate Goals

Let’s say it’s time for your business to expand, to do some hiring and outsourcing.

You want passionate individuals. You want folks with similar work ethic. You want team
members that will align with your brand’s culture and help it evolve-- but how to find them?

Your business plan is one concise document you can splice however you want and share with
whomever you want. It'll help attract the right talent by spelling out your mission, defining your
brand story, and communicating your company culture!

6) Set Management & Employee Objectives

A legitimate business plan includes specific objectives to keep the team and management on
target. You don’t need to be super precise here, but rather set some general milestones and leave
the micro-management to cloud-based tools like Slack, Google Docs, email, etc.

7) Provide Direction

For most entrepreneurs, a business plan is a pivot-point later on in their brand's development--
once it's absolutely necessary to have one. But why wait? Instead of delaying your concrete
planning until after you’ve created a huge mess, hop aboard and update your methodology now.
This doesn't have to be as scary as it sounds. Over the last decade a few companies have totally
revolutionized the conventional notion of business planning. Business plan software like
LivePlan and Enloop are super streamlined and user-friendly. They make it easy for anyone to
start strategizing!

 The following are the essential components to a business planning guide:

1. Business plan executive summary – a snapshot of your company and your goals
2. Market analysis – your research into the industry, the competition, and your
market
3. Company description – a detailed description of what makes your company
different
4. Company organization – the structure you have selected for your company
5. Marketing and sales – how you plan to market the business and make profits
6. Service or product line – a description of your product or service and how it will
benefit customers
7. Financial projection – a broad view of the financial scope and earning potential of
your business
8. Strengths, weaknesses, opportunities and threats – this is an important step and
will involve you being realistic about what challenges you may face, the potential
threats, your own weaknesses, etc.

The business coaches at Silicon Valley SCORE are ready and willing to help you with
the business plan guidance phase of your business.

Section of The Plan

Following is the list of seven essential sections to be included in your
business plan. Let’s jump right in.

1. Executive Summary
 This is usually the first section in your business plan, which outlines the
ideas and clearly define what you actually want in this business venture.
So if your business plan shall be read by others such as business partners,
investors or appropriate team, it is easily understandable.

2. Business Information

This section defines which industry are you going to enter. And when we
say industry, it normally become too general. So, you have to break down
which niche within the industry are you going to shoot at. You need to
write down all those description as detailed as possible.

 The general business idea

 The concept of your business
 The detail product or service
 The unique selling point or unique selling proposition (USP) of your
products or services.

3. Market Strategies

When you came out with the business idea, you could have known which
market you’re going to get in. In general, there are three market layers:
low, medium and high. But this information may not enough. You have to
go much deeper. You can go through this list to better defined the market.

 Are you going to get into low, middle or high-end target market?
 Describe much deeper by describing the right niche within your
chosen target market.
 Are you going to sell to a business (Business to Business – B2B) or
selling directly to end user (Business to Consumer – B2C)?
 What strategies are you going to use to penetrate the audiences?
 Which advertising or promotional channels are you going to use to
reach the market?

4. Competitive Analysis

The purpose of this section is to define the specific strengths and

weaknesses of your business compared to the existing competitors within
the market. So, roll up your sleeve and do your research. If there’s not
much competitions in the industry, you have bigger chance to grab the
market. But if there are already many players, you have to come out with
the uniqueness, build your strategies and get tactical to steal market
share. Not easy indeed, but there is always opportunity.

5. Development Plan

Development plan includes business strategies and development plan. It

contains estimation of future business development and strategic point to
achieve it. You can come out with tables or charts describing growth
predictions of the business, usually yearly.

6. Management and Operational Resources

 In order to run your business, you need management and operational
plan. It is developed to describe how to manage and operate the business.
Here are what you need to plan:

 Who is in charge in the management team and who is the key

person or CEO.
 What are the responsibilities of the management team.
 What are the responsibilities of the CEO.
 Define how many team you need and how many people in each
team.
 What are the job description of each team and each person within
the team.

If you are going to set up a team leader within each team, you need to
describe his responsibilities in managing the team.

7. Financial Factors

In every business startup, financial plays an important role. You have to

write down certain financial requirements as such:

 Where is the location of your business and how much it will cost?
 How many business tools do you need and how much are they
going to cost?
 How many human resources do you need and how much are they
going to get paid.
 How much is the operational cost?
 And when sum up, how much do you need to run the business.
 When you have written down all the financial aspects of your business,
you need to know where to find this capital. There are some sources
where you can try to such as:

 Personal savings
 Business partners
 Private investors
 Venture capitals

So, here they are, 7 essential sections to be included in your business

plan. If you have other thoughts, do submit them in the following
comment box. And if you find this business blog post useful, please share.
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