Most of us are pragmatic people, not relying blindly on emotions and trying to calculate the profitability of any, even the most trivial investments. Even if we buy a pair of shoes, we weigh the pros and cons of whether the color is suitable for your favorite jeans, will the couple sustain regular trips to the dacha, does the quality match the price, and, in general, do we need in the wardrobe the 25th pair of shoes? And the decision in favor of the purchase can be made only in the case when a comprehensive assessment is carried out, and the pluses outweigh the disadvantages.
But the scheme that works, and quite successfully, in such trivial things, often fails when it comes to business. Otherwise, the question of whether a businessman needs a business plan would simply not arise.
As practice shows, “atheists” in this sphere are much more numerous than witnesses of the sect of business planning. This is especially true for small businesses, but those who invest billions in their project with a payback of several decades, want to have at least some confirmation of its prospects. But those who dismiss business planning because their projects and investments are more modest, we assure you that even if you are going to open a microbusiness, you can not do without a business plan. And, as in the famous song, there are as many as five reasons. We suggest you read more about each of them.
Reason #1 – Strategy
Of course, business is not a military operation, no matter how stiff and highly competitive your niche is. And nevertheless, one who is on the verge of opening his own business can not do without a development strategy. By the way, to experienced entrepreneurs this document also does not interfere with the launch of new activities.
The vast majority of entrepreneurs believe that a business plan is needed. But there will always be “real heroes who always go around”. And their route is often extended to unlimited distance and time, because they simply do not know where they are going. After all, any plan is a route that leads to a specific goal. And you probably do not care where you get. Therefore, the plan begins with the definition of a specific goal, described in detail.
And a business plan is a way, and then you decide to fly you by plane or ride a bicycle. You can also walk on foot. So you define the tasks and activities that will help you reach your destination. And choosing a method, you determine the speed of achieving the goal and implementing the plan, set dates and calculate the time.
And when all this is already described, it immediately becomes clear how much it will cost, what resources are not enough and what can interfere. And all of this you make into the plan, so as not to get lost in the way.
So it turns out that the plan is a map. And you must agree that having such a detailed map in your hands, you will not get lost, because it practically guarantees you the achievement of your goals.
In short, the business plan will help you not to get lost on the battlefield with competitors, but to win your small victory by coming to the goal. By the way, you set this goal yourself.
Reason #2 – Planning
At first glance, planning and strategy are hardly any different from each other. But everything changes, you just compare your business with an ocean liner. To send a large ship to a large voyage, you will have to determine the departure and arrival points, as well as plot the course from one to the other, taking into account all possible obstacles, like icebergs and pirates. This will be a strategy.
But the holes, the change of crew members, and even the unexpected arrival at the wrong point (we all remember: Columbus sailed to India, and sailed to quite another place), which had to be taken into account and “adapted” to them, is planning. Thus, planning allows you to assess the prospects and capabilities of the company taking into account the real conditions, control the processes inside the company and “follow the course.”
Reason #3 – Money like a count
One of the main functions of a business plan is that it allows you to control costs and forecast earnings. Of course, it’s great to think that you can invest $ 150 in your business and become indecently rich in two weeks. But those who are focused on serious business and long-term work, do not like empty illusions. Give them a realistic financial scenario.
Reason #4 – Partnership
As a rule, starting a business requires certain knowledge, which the beginner simply does not have in the industry. More often to start a business, a starting businessman needs a certain amount of money, which he again does not have. Instead of tearing his hair from grief or silently saying goodbye to the dream of becoming an entrepreneur, it’s better to sit down for writing a business plan. Yes, this document is able to help even in this situation.
Of course, a business plan can not magically turn into a bunch of money or priceless knowledge, but it can help you to attract a partner with an experienced experience or get money from a bank or an investor.
Having looked at a good business plan, they are more likely to risk investing in your project, making sure of its prospects. But the absence of a business plan is a sure sign of a lack of prospects.
Business, like any other responsible sphere of activity, requires a clear and consistent action plan, which spells out all the details, all possible difficulties and ways to solve them.
At the start of the company, a business plan is needed in order to determine the order of its work, that is, to put a global goal and to split it into smaller ones. The business plan helps to systemize spending, determine how and how the company will make money to go “to zero”, and when it starts to make a profit. The business plan helps to see the strengths and weaknesses in the work processes, to build an effective system, which takes into account any development of events.
That is why a business plan is something that helps investors decide on cooperation. If you do not give them even him, the decision is unlikely to be made in your favor.
Reason #5 – Motivation
Nothing motivates you as much as understanding what kind of goal you are moving to. It is generally believed that involving the company’s employees in the development of a business plan allows them to better understand where the firm is moving, and therefore it is better to try for its benefit. And this thesis is true first of all for the very beginning businessman. It is for this reason that it is not necessary to give the drawing up of a business plan to the attention of special agencies or freelancers.
For a beginning entrepreneur, it is necessary to personally participate in the development of a business plan, primarily for an objective assessment of his idea, landing it in the real world from a virtual one.
The business plan is necessary primarily for:
- Formulating a business idea into a full-fledged project;
- Studying the relevance of the business idea;
- Details of the technical side of the project;
- Calculation of profitability, economic feasibility of implementing a business idea;
- Calculation of the amount of necessary investments for the organization and conduct of business and the mechanism for their return;
- Planning the implementation of a business idea in time.
Thus, it is impossible to overestimate the importance of a business plan for a beginning entrepreneur. The development of a business plan is the first step in the implementation of a business idea.
In a word, a business plan is an invaluable thing for those who are going to open their own business. It will help to set a goal, find ways to implement it, calculate profits and costs, attract investments and even motivate the team.
Of course, with the proper charisma and ingenuity, all this can be done without a business plan. But you just have to go blind to your dream. And this, as you know, reduces the probability of success and makes the path much more difficult.