Why Business Plans Matter
Date: May 06, 2021
Businesses cater to consumers’ every whim. As the world has learned during the COVID-19 pandemic, businesses play a vital roles in daily life, and many effectively cater to their clients even when their facilities are closed to the public.
Business owners recognize that the road to building successful businesses begins long before that first dollar is earned. Devising a strong business plan is one of the first steps toward building a successful business.
According to the Small Business Administration, effective business plans can guide entrepreneurs through each stage of staring and ultimately managing a business plan. Business plans serve as roadmaps that business owners can continue to look to as they build their businesses. Business plans also serve as invaluable resources once business get off the ground and owners’ focus shifts from establishing the business to growing the business.
The SBA notes that there’s no right or wrong way to write a business plan, though most will fall into one of two categories: traditional plans or lean startup plans. When writing traditional business plans, entrepreneurs should keep in mind that prospective investors, whether that’s lending institutions like banks or venture capital firms, will want to see detailed plans that include a mission statement, information about the product of service being offered and the people involved in the business, including executives in the leadership team. A market analysis, a marketing strategy, a funding request, and financial projections are some additional components to include in a traditional business plan.
Lean startup plans are less detailed than traditional business plans. The SBA notes that these plans are generally best for entrepreneurs who want to explain or start their business quickly or those who plan to regularly change and refine their business plans. While they need not be as detailed as traditional plans, effective lean startup plans may draw investor interest, so entrepreneurs should be prepared to offer more detailed information about the business on request. That means it’s helpful for entrepreneurs planning to write lean startup plans to also begin working on traditional business plans so they’re prepared if prospective investors request more detailed information about the business and its products.
Ideas are often the first step toward starting a successful business. But strong business plans are essential for entrepreneurs who want to turn their ideas into successful business ventures.