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.
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.
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.
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.