Why should every startup have a business plan ?

The start of the 21st Century has seen it all. Right from the Y2k disaster to the burst of the dot-com bubble and the sharp rise of the internet. This new technology that has made the world accessible at many’s fingertips has significantly increased connectivity and with it, the input of knowledge. The internet, also known as the information highway has made it easier than ever to know, connect and most importantly, solve. This has given a great encouragement to entrepreneurship among our race. People from all parts of the world are collaborating, thinking and coming up with amazing business ideas. In fact, most successful entrepreneurs claim that they have met at least 3 people with a potential million dollar business idea. Sara Blaleky, the CEO and founder of Spanks proudly inspires people by saying that each one of us has the potential to start and create a million dollar business from nothing. And to many’s surprise, this statement is becoming more true with every passing day.

If you’re someone with an entrepreneurial itch and you’re thinking of creating a revolutionary start-up, the first thing you need is a revolutionary plan.

It is essential that every start-up has a business plan. This is to ensure that founders are completely aware and focused on the end result of their ventures. Without it, it is quite easy to go astray. A good business plan will align the kind of people you bring to the table, the actions you decide to take and the goals you set for your company. Without it, draining the noise, distractions and short-term awards that aren’t in alignment with your end goal is impossible.

Here are some reasons why your start-up needs a business plan:

• To determine if the business can be profitable

Creating a start-up and becoming a founder is an exciting idea! However, founders often fail to go beyond developing an outline. They may not realize that an idea is just an idea and needs more structure due to their passion for it. It is possible to turn a concept or idea you have into reality with the help of a business plan. Among the most important aspects of a business plan market research. If you are starting out in a new market, understanding the market of your choice can be helpful. Market research will add components such as advertising, marketing, PR and more which must be included in your business plan.

• Emphasizes the end-goal and guides your business.

To take advantage of positive growth in any field, you need guidance and steering. When you are managing and starting your business, a solid, planned business plan will help you succeed. In this way, you can go over all your critical elements and strategies in detail. The viability will also be checked, as well as the amount of time and money necessary to achieve the required goal.

• To find investors and funding

Prior to finding you, prospective lenders or investors will want to see a written business plan. The investor becomes confident that he or she is investing in the right company if the business plan predicts strong numbers. In addition to attracting investors, a business plan is needed if your business might need a bank loan. Over all, no one is going to invest in just an idea and without a business plan clearly defining how the idea can be made into reality, your start up might just not kick off!

• Gauge risks and reduce them.

Many people think that starting up is all about taking risks. On the contrary, many successful founders claim that start-ups must have as low risks as possible! All businesses hold a certain amount of risk. Creating a business plan can help you manage risk more significantly. Plans for revenue, calculating expense, operational plans and devising logistics can help an entrepreneur understand his business model well. By doing this, a business can reduce its risk factor. Planning well will help you make sound decisions and leave less to chance. Most of all, it will ensure you do not exhaust your capital in the name of risks and actually float for as long as possible.

• Identify Weakness, Strength, Opportunities and Threats.

Doing a SWOT analysis is the very step for your start-up before any kind of physical action should be taken. A business plan ensures this. SWOT or Weakness, Strength, Opportunities and Threats is a table which you fill with points after brainstorming. You can identify and correct any shortcomings in your business idea. It is also possible to hire individuals, such as a focus group or team of professionals/experts, who can listen to your ideas and provide advice and opinions. Getting advice will also allow you to reduce the opportunity costs you would have otherwise incurred. Writing a business plan will help you determine which opportunities are most suitable to your business.

• Determines what strategies to use:

Businesses and entrepreneurs are required to ask many important questions when creating a business plan. What are going to be their marketing, consumer relations, pricing strategies? This helps them anticipate and prepare for problems that might arise in the day-to-day and long-term scenarios. Business plans help businesses articulate what type of company they hope to become one day and form a realistic vision for their future.

• Clearly state the objectives and benchmarks

When a business plan isn't followed, objectives are often overlooked. If there is no clear outline of the path to follow, the reasons for the objective may not make sense. You can set realistic, consequential and intentional benchmarks with the help of a business plan. You can also keep yourself accountable for the long-term vision and strategy you intend to implement.

• Helps determine how and what resources your business needs:

In its most basic form, a business plan provides a sense of how funds and resources will be allocated and structured. By doing this, you will be able to find out how financially stable and feasible your business is. In addition to checking the feasibility of the plan, funds will also be needed to hire employees, open an office, and determine what the operating costs might be.

It is easy to implement and important to be done:

According to its definition, a business plan is a tool used by entrepreneurs to plan the path their businesses will take over the coming three to five years. Your business goals are outlined along with the projected revenue you will need to reach. As a living project for your business, it should not be viewed as a one-time document that you create and then forget about. A business plan is going to be the first stepping stone of your new business and it must receive its due time and credit for the success of your business!