Why a Business Plan is Important for Entrepreneurs
With anything you set out to do in life, it’s a good idea to have a plan. This same advice holds true when you start your own business.
A business is a risky venture. You can make a lot of money, you can break even or you can lose a lot of money. Every entrepreneur has high hopes for a profitable venture, but sometimes a closer look shows that your business might succeed after all.
A business plan is a chance to evaluate your business. You will get a closer look at how you propose your business will be organized, the financial situation of the business and smaller details, like marketing and planning a budget. You get to see every aspect of your business at once.
A business plan can help you clarify your goals and see if your idea will be profitable in the long run. Plus, you’ll be able to foresee problems you may experience down the road. While writing the business plan, you may examine various areas and see that the business is actually not going to be profitable. This will help you save time and money in the long run.
What is in a Business Plan?
A business plan outlines your plans for the various aspects of the entrepreneur’s proposed business. It may include information about human resources, marketing, finances, operations and intellectual property. It is essentially a document that outlines sub-plans for each area of business. If the goal of the business plan is to obtain a loan, then it will focus primarily on finances and ways you plan to raise money.
Why Do You Need a Business Plan?
A good business plan can help you accomplish the following:
- Determine how much money you will need to start up your business and keep it operational
- See if you can make a decent profit from your business
- Convince investors, banks and other lenders to loan you money
- Define your market—determine how your customers will be and what percentage of the market share you will be able to reach
- Find out what your competition lacks
- Develop an effective marketing strategy
- Foresee future problems
The primary goal of a business plan is to raise money. Therefore, your plan should focus on how will business will work and what you will be spending money on. It should be well-researched and well-written if you want an investor to back you up financially. Investors want to see your future goals and how you see your company in the future, so include a cash flow projection and profit and loss analysis. Plus, a study showed that start-ups with a business plan raised twice as much money as those that didn’t.
Learn More About Drafting a Business Plan
A business is a significant undertaking. You need to start with a business plan that will outline what you hope to achieve in the end. You wouldn’t build a house without plans, so why would you start a business without one?
If you’re considering entrepreneurship, Godfrey Legal business firm in Orlando can help you get started on the right foot. With more than three decades of experience, we can help you draft a viable plan so your business venture has the greatest chance of success. Contact us at (407) 890-0023 today for a consultation.