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Business-Plan

5 Reasons Why Startups Need A Business Plan

The main serial killer of startups and SMEs is a bad execution. A business without a plan is like a ship without navigation systems. Eventually, it will end up lost or crash.

A business plan increases the chances that your business will prosper. According to a study conducted by Babson College, new companies with a business plan increased their capital twice as much during the first 12 months compared to those that did not. More than a recipe for success, it is a tool that can be used to set objectives, monitor your progress, be accountable and, ultimately, have a comprehensive vision of the destination of your business.



5 Reasons Why Startups Need A Business Plan

Writing a business plan forces you to have a more complete vision of your business project, and the holistic perspective that gives you will allow you to identify weak points that otherwise would have been overlooked. Elements such as the value proposal, operations plan, personnel estimates, among others, are some of these factors that we sometimes forget.

Here are five great reasons on why your startup needs a business plan: 

1. To set objectives

The most important thing that a work plan will bring you is the order. It is normal that as you begin your project, you are so passionate and excited that you lose a bit of the floor. It is precise to prevent this from happening that you need a business plan that allows you to take some steps back and look objectively at your work.



Many directors learn the bad that, without a plan, their work is time and effort thrown away. A business plan helps you get started on the right foot, it tells you how much capital you need to achieve your goals and what skills your team’s key team members need to move the project forward. With a traced route, you can be sure that you are going in the right direction.

2. Predict the costs of the operation

The prices of your service will not be fixed and as your business grows it will require a new capital investment. When you reach new markets, it will be more difficult for you to sell, since your group of selective suppliers is occupied by the competition. Therefore having a business plan will help you to know how much money you need and if it is really worth investing in a particular area, or leave it in the background.

If it is a service company, for example, its expansion will require a higher number of people to support you in work. You probably need to open a branch or offices where your staff is concentrated and thus improve customer service, all this means costs and what better than having them planned in writing.



Also read:
3 Apps to Help You Write a Business Plan
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How To Create A Business Plan To Attract Investors

3. To raise funds

Most mutual funds and banks require evaluating your business plan to decide if it is worthwhile to leave your money in the hands of your company. On the other hand, if it is a matter of borrowing money from family or friends, the best way to raise that amount will be to support you in this work plan so that you communicate the vision of your project in a clear and convincing manner.



It also offers many advantages when offering shares or selling a business, since it helps buyers understand what they have in front of them, why does the project have that value? Why do they need it? Or why is it worth buying? Are some of the questions that can be answered in said plan.

4. To have control over your business

Business is controlled the smaller its range of operations, however, when, when it increases, the chaos begins to fill every corner of it, and if there is no order on each process, it is often lethal, and there can be no remedy. Having a business plan will help you go back, pin down what is working, what does not, and point out what can be improved.



If your company converges employees, the implementation of this work tool will be advantageous, since you can consult the staff, understand their needs within your facilities and propose a solution. Your employees will value this opportunity to contribute to the business.

5. To clear the picture; copy it and improve it

A business plan is not a document that is created once and must be stored in the drawer. It is a life guide that must continuously be adapted as a business grows and changes. Writing and research to make this work plan generate the opportunity to learn about the industry, market, and competitors, in addition to identifying the challenges you can find and develop strategies to avoid or overcome them.

Also read:
How to Start a Pet Care Business In 10 Steps
How To Create a Business Plan in Just 2 Minutes
How to Quit Your Job and Start Your Business in 90 Days

Successful companies review and update their business plan when circumstances change. Given this, it is advisable to make it routine, create a reminder to discuss your business plan regularly. If your business is made up of a team of partners, managers or mentors, it is advisable to hold brainstorming sessions, thus exchanging advice, doubts, and opinions and making sure that everyone is on the same page.

How To Create a Business Plan in Just 2 Minutes

It is always good to have goals but it is much more important to materialize them, and it is essential to have a plan. If we want to get somewhere, we have to have a map, and in the case of a company, a business plan will be our map. 

In this post, I will show you how to make your business plan within a few minutes.



1. You need a plan for your business.

For several years there has been a discussion about whether to make a business plan or not. The “Gurus” in the matter “Lean” will tell you that no plan of activities holds the first sales meeting, i.e., a business plan is a wet paper. 
Without having a written business plan, it’s tough to find an investor. To turn your idea into a successful venture, you should write a program of activities. That can be in a 30-page formal file or can be a 2/3 page brief on your plans. 
If you have a written business plan, it will be easier to avoid a lot of mistakes and focus on what is important. Get customers and sell.

To write a perfect plan of activities, I have written a step by step guide for the advanced business person, who already have some idea of starting a business. You can read it here

2. Your business plan on one sheet.

The key to everything is to have a working guide that sets the way for us to continue in our business but that is not immovable like a rock. The plan of activities has to be totally flexible and has to be able to change as we work to our potential or future clients.

For this, the best option is to create your business model in a single page that you can change, modify or create again quickly.



3. Elements of the business plan or business plan.

A business plan, after all, proposes a business strategy, in this case on a single page. This plan has the function of answering many questions that we can group into the following categories:

1. The problem.

At this point, we must answer the following questions. 

  • What problem do I solve? 
  • Whom do I address the problem? 

When setting up any business, I always observe the same mistake, which is not having defined the client correctly. You have to know perfectly who your customer is.



2. The solution.

At this point, you have to answer the following questions. 

  • What solution do I offer to the problem I want to solve? 
  • How will I generate value, lease income, with the solution I propose to the problem that I want to answer.

 



3. The problem/solution socket.

Here we must answer the following questions. 

  • How will you explain clearly and concisely what your company is? 
  • How are you going to measure that the lace is produced?

The fit is when you actually buy your product or service because it solves a problem.



4. Competitive advantage.

When we have a business or company we are not alone in the market, we have to be able to measure ourselves on the competition and to know where we are. For this, it is vital to ask ourselves the following questions. 

  • What am I better than the rest? 
  • What am I worse than the rest? 
  • Is there any gap in the market that is not covered?
  • Can I become strong in it?

To answer all these questions, create the business plan on one sheet.

4. Income.

When it comes to starting a business, we have to be able to generate revenue. It’s the major target of a business to get the most profit. Have a proper plan and ideas to achieve your financial success. 
In the business plan that I propose, you will have to answer two questions regarding the income of your business.

  • What are you going to sell?
  • How much does it cost to produce or manufacture?

It is not a simple question to answer, imagine that you are freelance and that you are going to work from home, what costs do you have? Your time is worth and how you will value it. They are not simple questions to answer, but at least you must focus on what is strictly critical.

5. Define the price.

Even when related to the previous point, when we start we do not know how much we will charge for our products or services.

There are many variables when deciding the price of a product or service. Of course, we must try to collect the maximum for what we do.

When we start, we tend to charge below what competing companies charge. This is entirely feasible because the businesses that are established support a series of infrastructure costs that we do not support at the beginning but that we will have to support if we want to grow and have a business development.

I to decide the price of a new product or service always do the same test. I am going to visit a possible client, I try to sell the product or service and ask the next question.

How much would you pay for this?

Usually, they tell me a much higher price than I would sell it, but it gives me an orientation to set my pricing strategy. If you do, you will have to include it in the business plan that I present to you.

We have arrived, you just have to write a single page business plan (must not be more than three page). Remember that it does not have to be perfect, just draft it and put it into practice. Once this is done, then modify it as you learn from your clients and change it until you having a definitive version on which you are going to develop a more extensive business plan.