Having a business plan is essential for entrepreneurs, whether you are launching a startup, or expanding into a new market. This post is the first in a series that will offer an overview of business-plan basics as well as instruction on its most essential elements.
What Is a Business Plan?
A Business Plan is a document that establishes the vision, viability, and strategy of a business.
Why Create a Business Plan?
1. It Provides Clarity
Writing things down forces you to think them through. Unexpressed ideas are liable to change or disappear without notice, but writing them down makes them official. In order to create wealth, you must define your mission, count the costs, evaluate your vision, and formulate a strategy. Writing all this down helps you prove the feasibility of your idea, avoid oversights, solidify your goals, and establish a blueprint that will direct your efforts and motivate your team.
2. It Attracts Capital
A business plan can be used to convince potential backers to invest in your business. If you need help raising capital, a well-crafted plan—not to mention a good idea—will demonstrate the viability and potential reward your business has to offer to investors. With this, you will be able to present a persuasive case for investors to assume the risk of investing in your work. Common sources of financing include Venture/Angel Capitalists, family and friends, the SBA, and SBICs.
3. It Creates Hope
Humans are emotional. We need to know that the efforts we exert will bear fruit. Having a confident vision and well-formulated plan creates positive energy that will fuel your work. Without a vision and strategy, there is no basis for hope, and no real incentive to put forth effort. But when you have articulated your vision, demonstrated its feasibility with analysis, and formulated a strategy to achieve it, you create energy that your company will thrive on. It is impossible to eliminate risk, but crafting a business plan will enable you to pursue your vision knowing that the potential reward is worth the risk you’re taking.