Why is a business plan of such central importance in a business? Why is it so controversial? Why do some people seek to downplay its importance?
Surprisingly, others would claim that a business plan has no value. We can immediately dismiss this view as without any logical basis. Every single activity, from one day’s work to longer-term projects, requires planning, investigation and analysis.
A business plan is a valuable tool, required both for small- and medium-sized companies as well as for major corporations, whether they wish to start a business or to help it grow.
When managers put down on paper the data necessary to create a business plan, they are forced to organize and structure their business ideas. The business begins to take shape. A written plan reveals complex aspects of future work or work in progress.
Synthesizing all the data needed and structuring them into a specific business plan is not a task to be undertaken lightly. A guesstimate analysis is required, to take existing data into account and keep within reasonable bounds. While it may take up to several months to formulate a viable plan, once accomplished, it will bring about real, important benefits.
Three Reasons Why Any Business Should Have a Business Plan
- A business plan is an effective tool for defining the existing realities. It prompts you to analyze your business project or the existing situation objectively and critically, define a focus and set realistic goals. It may also constitute the basis for control and evaluation.
- A good business plan will reveal weaknesses or omissions in your planning. Because good business plans require a guesstimate of risk calculation, they help to reduce risks.
- They provide a valuable communication tool presented in an organized, credible manner, which allows lenders, outside directors, investors, banks and employees to obtain a complex view of your business. Even if, in some cases, a business plan format is not officially required when applying for a loan, although most lenders will ask for one, the very existence of a plan constitutes a plus, a step forward in obtaining the loan.
Why Do You Need a Business Plan?