8 Reasons You Need a Business Plan for Your Small Business
Importance of a business plan to small businesses.
A business plan is not just a piece of paper as some people erroneously believe. A business plan can be seen as a tool with which you can accomplish many things for your small business.
Among the small business owners I have privileged to meet and discuss with, only few of them consider a business plan very important. For this reason, I deem it necessary for me to shed more light on the needs for a business plan for small businesses.
Below are some of the things you can do with a business plan
Sourcing for finance
If you are sourcing for funds for your small business, either from private investors or from the banks, one of the things they will like to see is a business plan for the business. From a business plan, they can assess from their own viewpoints whether the business is worthwhile or not. Before you can secure significant amount for your small, you need a business plan.
Read Also: Vital Sources of Finance For Small Businesses
Secure stakeholders interest
If you want your small business to succeed, you need to secure the interest of other stakeholders. Stakeholders are not limited to those who contribute capital to the business. Other stakeholders you must carry along include suppliers, customers and staffs. With a business plan, you can easily communicate your vision, mission, goals and plans for the business with them in order to secure their interest.
Outline of goals and visions
A vision or goal not documented is just a dream and there is tendency for you to forget it. “A short pencil is better that a long memory”, someone quipped. With a business plan, you can outline the vision, mission and goals of your business.
Determining the feasibility of your idea
Not all ideas are good ideas. Some ideas are good but the circumstances or prevailing situation may nullify its practicability. With a business plan, you can determine the breakeven point of the business. You can evaluate whether you have enough resources to start the business.
Examining your business idea
Business plan will cover all important aspects of the business such as potential customers, market size, operations, sales and marketing, competition, staff requirement, finance and the profitability of the business. It is all encompassing. It is possible for a business idea to be lucrative but if the market size is too small, there may not be justification for going into such a business. Also, if the competition is too stiff and you don’t have enough resources to compete or differentiate your product, the business idea may not be a good one.
SWOT analysis
In business plan, you can analyse your strengths, weaknesses, opportunities and threats. In most cases, people don’t think about their weaknesses or threats. They only focus on their strengths and the opportunities. A business plan will force you to conduct a holistic SWOT analysis before you go into the business.
Develop strategies
After you must have carried out SWOT analysis, it becomes easier to come up with strategies that can help you operate and market your business successfully. For an example, a business plan may reveal that you don’t have sufficient funds for the type of business you want to start. You can quickly come up with ideas on how to raise funds before the needs arise.
Read Also: How to Write a Good Business Plan
Develop key performance index (KPI)
With a business plan, you can easily establish measures that you can used to evaluate your business success. If you can determine your KPI from onset, it will act as a guiding tool that will help you channel your efforts towards achieving your business objectives.