For many entrepreneurs writing a business plan often times seems to be a waste of all too valuable time. Many argue they need to start making money, rather than writing a document that could take months to complete. Others will cite instance after instance of business owners they know who never used a business plan and are successful today. While this may be true, there are thousands of business owners who have taken the time to write their business plans and who will readily attribute their success and most importantly, their ability to avoid costly mistakes which would have bankrupted their business.
A Living Document Which Makes Your Company Stronger
First of all you need to understand a business plan is a living document and not a one-time publication. Business plans serve as a general guide for the direction your business is going and defines your business goals for the next 3-5 years. So unless only you plan on staying in business for 3-5 years in an industry that never changes, you will need to update your company’s plan continuously! Your plan should be constantly updated as you acquire new and better information. Ideally this will be every quarter, but a yearly update is better than not at all.
Over time, your business plan will be your company’s best friend. It will teach you what you were doing right and what you were doing wrong. With every lesson learned your company will become stronger, more intelligent, and more efficient. Simply stated, not taking the time for a business plan will leave you vulnerable to costly mistakes which could sink your business and leave you bankrupt.
Angel Investors, Banks, and Venture Capitalists Require It!
Almost all investors, investment firms, and banks will require a business plan. With the exception of friends and family, no institution or angel investor will ever consider lending to a business without a plan. In fact, the very first item they will look at is this document. You will not only need a business plan, you will need one that shows your business idea is solid, your assumptions are accurate and well-thought-out, and shows a high potential for a return on investment. To give you an idea of how competitive business funding is, most venture capital companies reject 99% of the business plans that land on their desk.
It Will Show You Opportunity and Pitfalls
Every entrepreneur has visions of success and sees opportunity which will fulfill their dreams. The business plan is the first step in clarifying those visions and accurately viewing your dreams. The process of researching the information needed to write your business plan will give you insight to potential opportunities as well as pitfalls. The opportunities may come in the form of untapped niches, more efficient ways of producing your products, or a competitors weakness waiting to be capitalized upon. In the same breath you may discover potential pitfalls too. Some pitfalls are launching a business in a dying industry, a super-saturated market, or one with margins so thin that it will be impossible to become a viable business. Regardless of what you discover, having this information will either give you more inspiration or will force you to rethink your approach. Ultimately you will be more well-informed and more capable of making the best decisions for your company, and most importantly, yourself!
Where to Begin?
The good news is there are literally thousands of resources available for those looking to learn how to write a business plan. In general these resources tend to be on a high-level… more of an outline to be filled out rather than having all the information you will need to develop a plan for a microprocessor manufacturing company. However there are many resources available for industry-specific business plans such a restaurants, real estate, and law practices.
Here is a list of good resources for developing your business plan:
- Small Business Administration
- Books on Business Plan Development
- Business Plan Software
- Bplans – Business Plan Examples and Software
- Business Development Blogs