Entrepreneurs often ask, “Why do I need a business plan?” Well, let’s put it this way.
Do you want a successful business? Because, writing a well-thought-out and organized business plan dramatically increases your odds of succeeding as an entrepreneur. Running or starting a business without a business plan is like walking through the dark without a flashlight. You can probably go a long way using just your senses and relying on basic instincts. But operating in such a manner leaves you wide open to the risk that something will get in your way (like a competitor) and you probably won’t see it until it is too late. And just imagine all of the opportunities that are just waiting to be grasped – but without a flashlight, ah sorry – business plan, how will you see and take advantage of them?
The benefits of having a business plan include:
- Helping you to clarify your vision and deciding whether or not to forge ahead with the idea.
- Determining if your product and/or service has a sufficient market to support it and whether or not it will be profitable.
- Providing an estimate of your start-up costs and how much you’ll need to invest or finance.
- Convincing investors and lenders to fund your business.
- Defining your target market (who your customers are or will be) and how to best reach them through strategic marketing actions or expanding market coverage or reach.
- Establishing or reevaluating your competitive position within the marketplace, by conducting a thorough analysis of the competition (finding out where your competitor’s weaknesses are and how you can take advantage of them).
- Defining corporate objectives and programs to achieve those objectives.
- Helping your business make money from the start by developing effective operational strategies.
- Understanding the risks involved and anticipating potential problems so you that can solve them before they become disasters.
- Setting a value on a business for sale or for legal purposes.
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