Six Benefits of a Business Plan
Updated: January 28, 2020
The benefits of a business plan are many. Whether you are launching a start-up or maintaining an established business, a business plan is an important tool to take your business to the next level.
Why? Beacuse a business plan is your roadmap. You decide your goals and then identify how you will achieve them. Let’s be honest, most of us need something tangible to nudge us to act. That’s why we rely on post-it notes and electronic reminders.
So what are the benefits of a business plan?
- It shows you are serious. That little piece of paper has powerful psychological powers. Simply writing your plan motivates you to implement your plan. Tack it somewhere you will continually see it and be reminded of what you are going to do.
- It is your roadmap. How do you know where you are going and how to get there if you do not have goal? The business plan identifies your goals and how to achieve them. Though you likely will modify your plan, having a predetermined goal is essential to success.
- It identifies your financial readiness. For this, you need to determine your expenses and your reasonably expected revenue. How much will it cost to make your product or deliver your service? How much will you spend on rent, utilities, inventory, supplies, advertising, bank loan interest, etc.? How much will you have to pay yourself and your workers? Once you determine your expenses, you examine potential revenue. First, how much are people willing to pay for this product or service? Lastly, how much of this product or service can you sell? Will you sell enough to offset your costs?
- It’s an honest conversation about your product or service. You have must talk to your actual and prospective customers. If you don’t know the problem your customer seeks to solve, how do you know what product or service to offer? Example: you wrote an app to run your can opener from your smart phone – but does your customer really want that feature? All the money and marketing in the world can’t sell a product or service no one wants.
- It’s an honest conversation about your company’s preparedness. Through research and writing your plan, you learn as much as possible about your market, your target customers, your company’s ability to provide the services or goods, and your financial position. Be honest. Use simple words. Jargon and buzz words do not ensure success; they just mask the inadequacies of your plan.
- It’s an honest conversation with yourself about your personal readiness. Your business plan requires honesty. Your plan and product may be the next greatest thing, but if you and your team lack the motivation, desire, knowledge, enthusiasm, etc. success will be difficult if not impossible.
So, if you are launching a business or taking your business to the next level, take the time to form a business plan. Write it down to show your commitment. Act. A business plan in a drawer is just scrap paper. Write your plan, read, and act.