Your project of starting your own full time or side hustle business is now well on its way and you may be thinking about raising financing? You’re feeling enthusiastic about your future business, but you keep wondering whether or not you should write a business plan.
Starting a new venture means a lot of questions will arise, and writing a business plan can be very daunting for a new entrepreneur, but it doesn’t mean you should skip it.
Starting your business without a plan in your pocket could be a huge mistake: one which could definitely set you up for failure.
Let’s look at the 5 reasons why entrepreneurs can’t do without a business plan.
Most businesses need financing and it will be hard for you to convince a bank to lend you money, or for a potential investor to invest if you don’t have a professional-looking document to present.
A business plan will be required whether you’re pitching the project to your bank, to investors, or even if you’re simply applying for a grant.
Your financial partners will ask for a business plan in order to evaluate the risks associated with your business idea and to understand how much potential the project really has.
Putting together a meticulous business plan will give you a chance to convince them to invest.
Writing a business plan will enable you to gather your thoughts in one place, and create a clear roadmap of what you need to achieve in the next 3-5 years for your business to succeed.
It will force you to evaluate every aspect of your business, from how you are going to sell to how many people you need to help your customers. You will precisely estimate every expense in order to get a clear picture of how much you need to invest to start your business and how much profit it could generate.
Once it’s been laid out in front of you, you will have a full picture of what to expect for your business.
If you are just starting your first business, it’s easy to get carried away or a little bit over-excited about your idea.
Putting together a business plan will allow you to spot any discrepancies, identify any weaknesses and work on them. You will then understand which steps you need to take, and what are the constructive changes you need to make.
Making a critical decision on your work will allow you to let go of some ideas which seemed brilliant, but perhaps weren’t meant to work in this context.
Through the process of creating your business plan, you will forecast your business’ cash flow for the next 3 years.
Starting any type of business is challenging and things often don’t go as planned. Having the ability to go back to your business plan and adjust your projection as things develop will enable you to keep a close eye on your cash flow.
This will ensure your business has enough funding to succeed.
Writing a thorough business plan takes time. Between the market research, the number crunching, and the actual writing, a complete business plan won’t be done in a day.
Luckily there are online business plan tools which can help you.
A professional business software will do the maths and take care of the formatting for you, but it will also guide you throughout with instructions and examples for each part of the plan.
We now hope you know why you can’t do without a business plan for your project, and that you’ll get cracking on the writing.
Author Bio: This blog post has been written by The Business Plan Shop, which offers an online business plan software you can try for free.