Whether you are starting a small business or exploring ways to expand an existing one, a business plan is an essential tool to help guide your decisions. A business plan is the best way to test whether your idea is feasible without having to go out and do it, saving you a great deal of time and money in the process.
A well thought out and detailed plan is necessary for entrepreneurs to gain an overall perspective of the business and focuses on the necessary steps needed for their business idea to succeed. Even though a business plan will change over time as the business develops, it is a necessary first step that all entrepreneurs should consider doing.
There are a number of reasons why you need a business plan:
1. To raise funding for your business
Potential investors or lenders will not merely invest in an idea or concept; they need to see a thorough, detailed plan that describes business and financial decisions of how their investment will be spent. Investors will also require a return on their investment so the plan should demonstrate a clear vision for the business and the likelihood of its success.
2. Setting objectives and goals
The plan must enable an entrepreneur to define and focus their business ideas and strategies. Setting realistic goals and objectives will encourage an entrepreneur to stay focused on their tasks at hand. Every goal or objective reached pushes an entrepreneur to achieve the next one, creating a sense of pride and purpose.
3. Ease of implementation
Even though a business plan is a time-consuming task, it will save you time in the end. The business plan requires research about the complex areas of the business. Gathering information on the industry, knowledge of competition and marketability of products or services will make for a smoother start-up period and enable you to identify problems areas earlier on.
4. A way of keeping track
The business plan is a good way to monitor progress and keep the focus of the entrepreneur. Milestones can be used to track the progress of the business which should be outlined in the business plan. The plan can be used to review the missed goals and objectives of the business, which will aid the entrepreneur in developing new strategies to attain their objectives in the future.
The need for a business plan should be a priority when an entrepreneur is looking at starting and developing a business. Take the time to develop a business plan as it can only aid you in the achievement of your businesses goals and successes.
Kyron van Dyk
Trainee Accountant, Johannesburg