“A good plan is like a road map: it shows the final destination and usually the best way to get there.” H. Stanely Judd
It gives you a better definition of your business.
You might start out with an idea and have a clear picture in your head of how you’d like this idea to translate into practice and into the real world. But it’s not until you go through the process of writing up your business plan that you get a good grasp of what your business will entail. Don’t get this wrong, paper doesn’t always match reality either but it’s the fact that a business plan forces you to think of matters that you may had not considered before.
It points out the risks you might have to deal with.
Having to conduct research on the industry you’ll be operating in, entry barriers, competitors and customers usually leads to discovering what can go wrong. But that’s not a bad thing. Because if you know what to expect, you can plan on how to avoid risks or at least what to do when something goes wrong.
It helps if you want to get funding.
Investors need to see a business plan before deciding whether to invest or not. Good ideas are considered for funding only if they’re backed by a robust business plan, covering all main points.
It focuses your business.
Having a better understanding of the industry you’re operating in can clarify what your position in the market should be and what sets you apart from the competition. This in turn allows you to focus on your strengths and create a better product/service.
It keeps you on track and gives you the tools to monitor progress.
You will have to set targets, design strategies on how to achieve these targets and financially plan for the required actions. This process will come in handy when you assess your overall business operations, as it will clearly indicate whether you are achieving what you have set out to do or whether you need to review your strategy.
Writing a business plan isn’t always easy, because it most definitely require an objective perspective on your business idea, which is why a lot of businesses choose to engage professionals to help them with it.