Does My Company Need a Business Plan?

By: Eric Powers Click author's name for more of his/her articles

A business plan is an essential tool for an entrepreneur for a number of reasons. The plan, often developed with the help of a business plan writer or consultant, serves to examine the feasibility of the company before you sink a great deal of time and money into the idea, to organize a plan of attack for the management team, and to seek funding and partnerships which may enable the company to launch.

Market Feasibility Study

By its nature, a business planning process begins with a study of the market for the business’s intended products or services, the strengths and weaknesses of competitors and substitutes, and the exact needs of potential customers. This research, if done on more than a superficial level, should show you whether your business idea has a real chance at success. Feasibility studies can be undertaken by consultants and research firms, and this may be a great use of some initial cash. However, make sure that the information gathered is all available to become part of the plan if you choose to launch.

Organize Plan of Attack

Entrepreneurs have many areas to focus on during the pre-launch phase and early stages of the company: legal and insurance requirements, fundraising, marketing, sales, operations, innovation, financial management, and hiring, for example. To juggle all of these balls at once, a plan is needed. The same plan that funders will look at becomes the basis for an internal plan of attack, giving ongoing guidance to the management on the steps to move towards launch and then profitability.

Seek Funding and Partnerships

Finally, the plan is generally essential to achieve funding beyond the resources of the entrepreneur and his or her willing friends and family. Professional investors and lenders need to protect their own interests by examining a formal business plan prepared in a similar method to others they might look at. The same goes for serious partners, whether they are individuals or corporations, who may join forces to help the company launch and move forward.

3 More Reasons Why a Business Plan is Important

A business plan is an important document for any type of business, at any stage. Not only is it necessary to raise funds for the company, but it is used to craft a better company strategy through reflection on the past and projection into the future and to bring all employees together under that common mission.

Fundraising

At certain times in the life of a business, an opportunity arises to move forward which requires a capital investment beyond what the company can afford with its own resources. The startup phase is certainly one of these times, as is the situation when a business is ready to expand to additional locations, create a significant product extension, or to franchise. Fundraising requires convincing outside sources (investors or lenders) of the strength of the business’s plans and a written document is needed to support this argument.

Reflection and Projection

A business plan helps a business create a stronger strategy in the first place. The process of creating a plan creates a specific time for reflection on the past of the business (or of the industry and market if it is a new company) as well as projection into the future. Reflection should yield valuable insight into what tactics have worked and which have not. Projection into the future creates financial metrics against which the progress of the business can be measured.

Getting the Team On Target

A business plan is a document which can be shared with the managers and even staff of the company. By understanding the strategy and mission of the business, and the market research which has been done, staff and managers should all gain a greater understanding of why the business is run in the way it is. They should also gain a greater idea of the company culture that they should be trying to create. Writing a unified plan is a way to hand down marching orders to managers and staff.

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About The Author: Eric Powers is associated with Growthink, a business plan consulting firm. Since 1999, Growthink has developed business plans for more than 2,000 entrepreneurs and business owners who have raised more than $1 billion in growth capital. Call 800-506-5728 today for a free consultation with a Growthink business plan consultant.