You probably have heard that a business plan is important. Well, it is and you are better off having one than otherwise. Why it is that much of a big deal though? Have you ever wondered about that? In this article that is what we want to explore. Maybe if you get a better understanding of the ‘why’ your perspective might be rewired. That is why in this article we are looking at the reasons why having a plan is crucial.
A Means Of Refinement
An idea starts off as a thought. The thought must subsequently be given vent or expression in this material world. Materializing an idea that starts off as a thought is not as simple as it sounds. What you initially thought to be so might turn out not to be so or vice versa. New revelations might dawn on you as you move along. All this and more happens as you put in the work on drafting your business plan, so it actually helps you refine your initial idea which trebles the probability of success.
Increases Funding Prospects
No serious financier or investor will ever bankroll the idea that has been verbally presented to them. Probably your parent or close relative might do that but it is both rare and unwise.
According to www.startupbizglobal.com, investors or financiers want to fund things that are well documented and articulated. Even if an investor requires you to pitch to them something written will still be needed. That is where the business plan comes in – it makes you worth considering.
The short of it is that one who does not have a plan is several steps behind one who has one. The one who has one is more likely to be given an ear by prospective investors. If their idea and plan are up to scratch then funding is most probable.
Serves As A Compass
An idea connotes a vision which means there is an intended destination. The plan lays out how that destination will be reached i.e. the journey. This functionally makes the business plan a reference document of sorts. It will be used to inform strategic decisions as you navigate your way to success. Monitoring and evaluation processes can be easily made by referring to the plan. It can also be used to form the basis for strategic planning.
Causes You To Explore Feasibility
Feasibility is simply the quality of being doable. Of course, an idea can seem potent in your head but do not fool yourself. It can turn out to be a whole different experience as you try to put it to life. That is what makes it key because you get to explore and assess whether or not the idea can be done. Can it be done? What factors can affect the effective implementation of the idea?
In light of those factors, can the idea still be materialized? These are some of the questions that have to be answered. As you work on your business plan you will realize that these questions and more will come to light. A feasibility study must not be done to simply fit a pre-determined narrative. The irony is that most entrepreneurs tell themselves that their business idea is the real deal no matter what. This, however, is not the purpose of assessing feasibility.
An objective approach in drafting a plan can culminate in deciding to move ahead, abort everything, or make adjustments.
Helps You To Draw Insights
A plan will open up your eyes to things you probably might have never thought of. There are so many things that constitute a business plan. For example, as you review literature in your pursuit to do market research you can discover remarkable insights. It could be as you are exploring market segmentation you might find new interesting insights into your market.
Structures Your Business (Which Makes You Fully Understand It)
A business plan helps you to structure your company. Once this structure is up you get a clearer understanding of your business much more than just the basic idea. By creating one, you will look at all the major aspects e.g. human resources, inventory, supply chain, and so on. You will better understand how they relate to each other. You will even be able to identify what the core areas of your business are.
Even running diagnostics when challenges arise will be easy because you will be abreast of the structure and inner-workings of the business. Even in scenarios where you want to enter strategic partnerships, you will be able to easily assess the implications.
As you probably could have noticed, it is the actual process of drafting the business plan that is most important. If you take shortcuts in putting it together then you will just end up with a mere document. Of course, the document in itself brings about several benefits but do not cheat the process.