Why a business plan is a must for your company

Creating a business plan can pay off in a big way. Consider these five reasons why you should create a business plan.

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Published: April 24, 2015

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As a business owner, you're focused on the day-to-day. It's challenging and rewarding. You have a vision for your business, where you want to go next, but the daily demands can make it hard to turn your vision into a formal business plan. 

But having that business plan is critical. It's your roadmap. It helps you balance short- and long-term goals, assess customer needs, and size up your competition. It's a real-time document that charts where you're going and how you're going to get there. It's a foundation for future success.

Creating a business plan can be simple with the right tools and guidance, and it can pay off in a big way. Consider these five reasons why you should create a business plan. 

First, a business plan can serve as a guide through your company's life cycle, from startup to growth to succession planning. Gaining competitive intelligence and customer insights is critical for your plan. You just might discover a new target market that’s willing to pay a premium price for your product or service. With that information, you might re-target your marketing efforts, improve customer loyalty, or maximize sales.

Second, a business plan can help you determine how to spend your time and money most effectively. It can help you estimate what you'll need to spend to reach your goals, whether that means adding an IT expert or retaining an accountant. 

Third, a business plan may help you as you seek funding for your business. Some lenders require a formal plan before extending a loan or line of credit. Investors also want to see how you map out your strategy and goals.

Fourth, a business plan outlines current and future obstacles you might face. Your plan will include a description of your products or services, your plans for generating revenue, your target customers, trends in your industry, what your competitors are doing, and what resources you might need. This information can help you anticipate and avoid potential risks in these areas instead of reacting to them.

Finally, by turning your ideas into a formal plan, you can navigate internal challenges. By clearly defining roles and a strategy everyone agrees on, you can prevent conflicts between owners, employees, and other key stakeholders. 

As your business grows and changes, adjust your plan accordingly. Revisit it annual, biannually, or quarterly. This makes your business plan a living document that can keep you on track to achieve your goals, whatever they might be. 

Start building yours today by accessing the tools and learning resources in the Business Plan Center.

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