Advertisement

5 reasons why every startup needs a business plan

5 reasons why every startup needs a business plan

Just like planning is important in any aspect of your life, your startup deserves this much attention to detail

Are you a startup entrepreneur? If yes, have you thought of writing down a business plan for your startup? The rule of thumb is that everything that starts without a clear plan has more chances of failure than it has for success. Maybe you trust your memory so much that you don’t see the need for a hard-copy plan; you can remember all that you wish to do after all, right? You would be wrong, because a business plan writers are extremely important to a startup- just like planning is to any other aspect of your life.

Here are five facts in support of this argument:

1. It’s the Backbone to Business Strategy

It’s only through having the best strategy — and executing it to perfection for that matter — that a startup is able to compete effectively with the established business entities within its niche. But what is a business strategy without a well laid-out business plan? In a plan, you list all your business goals, outline management structure, plan on the human resource recruitment criteria, strategise on employees’ compensation and benefits, and plan on how to acquire new technology. It defines managerial positions, their titles, their offices, and their core functions so as to prevent duplication of roles and ensure a smooth running of affairs. A business owner can never make costly managerial mistakes when he/she works with a business plan.

2. It Helps With Budgeting

One of the greatest challenges that startups grapple with is how to come up with a budget and prudently manage their limited resources. It’s not uncommon to find a startup entrepreneur spending too much on human resource and later being unable to buy the much-needed technological devices that are necessary for the company’s future growth. With an elaborate business plan, however, entrepreneurs are able to budget for the little they have, cut down on the less important things, and spend money on the things that matter.

Also read: Shoot for the moon: Identifying your target audience and developing a superb marketing plan

3. It’s A Fundraising Tool

If you are a startup entrepreneur with a bigger dream than the resources at your disposal, then you probably have had to convince investors to buy into your dream at one point in your life. Or maybe instead of engaging potential investors, you tried to borrow money from banks and other lending entities in order to actualize your dream. Unfortunately for you, not many people would be willing to invest in a startup whose direction and purpose is unclear. Do you know what will convince investors and lenders to give you money? It’s a well-drafted business plan. A plan is all the proof that these people need to believe that you know what you want and you have a roadmap to the company’s future success. As for app funding, app developers must first design a working prototype to convince funders that the app offers a viable business opportunity.

4. It’s the Footprint That Helps the Your Team to Understand and Own the Dream

Which is a better way of explaining one’s mind than writing it down? A business plan helps entrepreneurs to communicate their business dreams to their team members, which in turn helps the members to own the dream. Research shows that a startup whose target goals are fully understood by its team has twice as big a chance to succeed than the one whose dream is confined in its originator’s mind. What are your sales targets? How do the staff members stand to gain when the targets are finally met? These are some of the things that will convince the most talented workforce to join a startup.

5. It’s the Mirror through which an Entrepreneur Self-Assesses His/Her Initial Ideas

When startup entrepreneurs write a business plan, it would be naïve for them to assume that it’s flawless. The secret to business success is acknowledging the fact that not all good ideas are workable and not all bad ideas are useless. A business plan presents entrepreneurs with a perfect reflection of the business today and in the future, which is a good basis for self-evaluation. Entrepreneurs understand the strengths in their plans, the areas in which they ought to improve on, and the parts that they need to scrap altogether. What’s more, when selling the business plan to funders and staff members, startup entrepreneurs get invaluable input from different people which only makes their business course even stronger.

When all is said and done, a business plan will not magically turn the tables to your advantage if you don’t work hard and commit to your business. Bottom line: Write a business plan to reduce your chances for failure but be sure to complement it with enough funds, sponsored ads, and everything else that your business needs in order to grow.

—-

e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

Photo by Craig Garner on Unsplash

The post 5 reasons why every startup needs a business plan appeared first on e27.