Why A Business Plan is Essential for Startups?

business plan

What is a business plan and why is it needed? This, one can say, is a rhetorical question that is asked not only by novice entrepreneurs but, alas, a considerable part of the representatives of already existing small and medium-sized businesses.

However, it is important to say right away that just drafting a business plan. In any form, it allows you to gain a clearer understanding of the vector of doing business and opens up opportunities for more stable growth and expansion. Just like if you are hiring an email marketing agency for achieving your goals, you will plan first and then go about it.

What is a business plan?

A business plan is a navigator for your business, which opens before you the most complete picture of the organization and conduct of a business project. At the same time, when it is you who are the compilers of the business plan, a whole series of questions come up that you might not even have suspected. That is, a business plan is a tool that will help you clarify goals, develop a strategy, and make your startup not so frightening and difficult.

Why do I need a business plan

It is the very writing of a business plan that gives you the opportunity to immerse yourself in the project as deep as possible and understand your strengths and weaknesses, see the threats to your business and feel the opportunities to increase profits.

From my practice, I want to add that in almost 50% of cases, people who compose a business plan and delve into its essence, numbers, and results, even write their own project with the help of an external consultant such as myself, are amazed how much the cost they missed and what sums, in the end, they would need to find to launch the project. But you must admit, it is much better to find out about such surprises even before you start investing financially in your startup.

Who needs a business plan

Start a new business. This is a classic startup script. In this case, the business plan will help to understand the maximum of important points in sales, budget expenses and other stages and tasks of the business, which may have some uncertainty or even slip from sight initially. Preparing your project on paper will show how much money you need and when you need it.

Existing business. Here, the business plan is used to effectively manage market changes and internal business processes, starting from the procurement of raw materials and materials, ending with the sale of products and the distribution of profits. Thanks to business planning, existing enterprises effectively manage their resources and costs. Such enterprises, according to statistics, are developing 30% faster than those companies that completely abandoned planning.

What are the types of business plans

Business plans are divided into three main types:

1. One page business plan. This is essentially a short summary of your business. But this is not always one page on which only your business idea is written. It will most likely be a couple of pages where the main essence of your business is stated in a well-readable font and the most basic performance indicators are calculated.

Such a simple business plan is perfect for the initial stage of forming a business when you just need to streamline the ideas that swarm in your head. A business idea designed in this way makes it easy to see the main concept and quickly clarify key points.

In order to write this simplest business plan, you just have to go through stage 1 in our online school.

2. Internal business plan. This is a plan with omitted formalities that are necessary for consideration of the project by third parties (investors, banks, etc.). Here, the whole focus is exclusively on business strategy, the main indicators of the budget, and the stages of formation and development of the business. The internal business plan, as a rule, skips such moments as the history of the company, the management team, etc., which is already known to everyone inside the enterprise.

An internal business plan helps business owners make important strategic decisions and evaluate progress towards achieving their goals.

To make an internal business plan with a dynamic Excel model of your business, you need to go through stages 1-3 at our school.

3. External business plan. This is an official (standard) document intended for reading by third parties and is a package of the most complete information about the business. This plan is a continuation (extended version) of the internal business plan. It should be well presented and pay much attention to detail.

Each external business plan should describe in detail where and how the invested funds will be spent. The reader of such a project (usually an investor) must clearly understand the return on investment. In an external business plan, a strong emphasis on the team is required, as an investor does not invest in ideas, but in people who will lead the project to profit and growth.

To prepare a good external business plan, you need to be patient, allocate enough time, and go through all seven stages of training in our online school.

Final Words

Many people think that a business plan is only needed to start, i.e. to get funding for the project. But I guarantee you that the constant use of a business plan, i.e. its monthly review in order to analyze deviations between planned and actual indicators will help you prevent the business from moving into an unstable and withering phase. Spend at least a couple of hours at the beginning of each month to track your planned goals, identify potential problems, and make appropriate adjustments to your strategy. A business plan should not lie on a shelf! It’s a permanent place on your desktop!