Originally published October 21, 2021 , updated on August 29, 2024

A business plan is a document that entrepreneurs use to pitch their business idea. This can be useful when it comes to requesting funding from potential investors. It can also be used to propose new elements to their existing business.

According to the Harvard Business Review, “Without a (business) plan furnished in advance, many investor groups won’t even grant an interview. And the plan must be outstanding if it is to win investment funds.” Needless to say, it’s a highly important document. A document you might want to leave in the hands of a business plan writing company if you have never done one before.

A business plan is essential for entrepreneurs for several reasons. A thorough plan is what will help you get your company to where it needs to be. A poorly written one, on the other hand, could have detrimental effects on the future of your company.

Below are some reasons why every entrepreneur needs a business plan.

1. It Shows That You Are Serious About Your Business or Business Idea

Anyone who takes the time to think about, plan, and plot their business is someone who is serious about what they are doing. Going into a pitch session without a business plan looks unprofessional. It could potentially show that you are not serious about your own business. Why should an investor take you seriously if you don’t take yourself seriously?

A business plan with all your ideas mapped out signals that you believe in your business. It highlights that you are passionate about your company and your idea. And that’s the message you really want to get across to investors.

2. A Plan Will Help You Understand Your Market and Customer

There is a mountain of research that one needs to do before commencing on the creation of a detailed plan. One of the elements of the research process is taking a deep dive into your target market and desired audience.

The research that you do in this phase will tell you everything you need to know about your customer. You will have a clearer understanding of a number of things when it comes to your target marketing.

First, you will learn if there is, in fact, a need for your business in this particular market segment. Second, you will come to understand why people need your business. Third, you gain a better understanding of how to market your products to your audience. You will know what media they like to read or consume, where they hang out, what their income is like, and so much more.

This is an important step in the creation of your plan. If you don’t understand your audience, you will never know how to reach them with your goods and services, or if they even want it at all.

3. This Document Will Show That You Have a Clear Idea of What You Want to Achieve

Drawing up a solid business plan will indicate that you know where your business is going and where you want to take it. It’s a good indication of what you envision for the future of your company.

If you are using the plan to pitch for new investment in your business, it will demonstrate opportunities for growth. Having a plan that clearly highlights the scaling potential of your company will excite anyone interested in putting funds into your business. It shows the expected trajectory of profit and details further income opportunities.

4. It Communicates Your Vision and Mission

Every business needs a clear vision and mission. The “why” behind the business and the product or company idea. Whether you are speaking to potential funders, partners, or employees, a business plan will communicate your vision and mission.

It’s important to showcase these aspects early on in the process of onboarding new investors, partners, or employees. That way, you can ascertain whether or not their values align with those of your company.

For example, if your vision is to create a world in which everyone has easy and free access to the internet, but an interested investor doesn’t believe in this, then your values clearly don’t align. And you can save your own time by not pitching to them at all.

5. It Shows That You Have an Understanding of the Sector You Work In

A business plan points out that you have a good understanding of your industry. If you don’t have this document in place, no one will know how you fit into your sector.

For example, let’s say that you wanted to start a business in the SaaS space. Perhaps the main reason for your business plan is to get a partner on board. A business plan will indicate to any potential partners that you have a good understanding of the industry. This is essential if you wish to grow in any space or sector.

6. It Will Highlight That You Know the Potential Strengths, Weaknesses, Opportunities, and Threats

A good SWOT (strengths, weaknesses, opportunities, and threats) analysis is a key part of any business plan. It not only shows investors and partners where the issues and opportunities are, but it gives you a clear idea for a way forward too.

For example, your SWOT analysis might highlight that you have a shortage of resources when it comes to graphic designers. This would be something you need to know ahead of time so that you can put steps in place to onboard more designers or make use of freelancers.

A SWOT analysis will indicate any opportunities you may not have noticed at first. It’s a good way to see where there is room for growth in your business, and how you can adapt to market needs.

7. A Well-Researched Plan Will Give a Clear Indication of Costs

You have a great idea and you know that it has the potential to grow down the line. However, do you know how much it will cost to just get off the ground? And how much profit you will make over time? If you haven’t taken the time to put a plan together, probably not.

A business plan will give you the room to do a feasibility study and will allow you to do costings on your idea. These factors will highlight how much money is needed immediately, how much you need down the line, and when you will start seeing a return on investment. It will also indicate if you will see enough of a return to justify the time, money, and effort you put into your company, services, or products.

8. It Helps You Set Clear Milestones for the Near and Distant Future

You can’t just jump into a new business or new product idea without an indication of what happens when. You won’t know which tasks need more of your time and which ones you can leave for later.

Putting a plan together allows you to map this out. It will give you an indication of what the top priorities are and when you need to do certain tasks. In a business plan, you can set goals and milestones to aim for over the next couple of days, weeks, and months.

This way, everyone knows what to do and by when.

9. A Strong Business Plan Can Be Used to Attract Investors

Your initial idea for your plan might not have been to attract investors. It might have been that you simply wanted to build a road map for your company. But if you have it and it’s good, use it to its full potential.

You can barely get a meeting with a potential investor if you don’t have a plan documented. So, there’s no way you are getting funding without one. A strong plan will be able to sell potential funders on your idea and will convince them that your business is worth their time and money.

Have a plan ready and up-to-date at all times. This way, you can whip it out every time you see an opportunity to pitch for more investment.

10. It Can Be Used to Attract Partners

Before we get into how to use this document to attract partners, let’s first clarify the difference between an investor and a partner.

Upcounsel.com notes that “a business partner is an individual that plays a significant role in owning, managing, and/or creating a company.” An investor, on the other hand, is someone that provides money and funding to an entrepreneur or organisation because there is the potential, and expectation, of a financial return on that investment.

If your company is growing or you need help running the business, this is where a partner comes in. In order to convince someone to come on board as your partner, they would need to know the company road map: what it’s all about, and where it’s going. This is where a business plan comes in. You can use this to convince a partner to get involved in your organisation.

Now that we’ve established why you need a business plan and how it can help you, let’s get into some tips on how to put a plan together.

Use a Template

There are a number of free resources available online for this task. Look into free templates that offer a step-by-step process on how to structure this important document. Don’t settle on the first one that you see in your search results. Shopify, Dummies, and Entrepreneur.com are good places to start.

Make Use of a Business Plan Writing Company

This is probably the best route to go. Using business plan writing services and professional business plan writers will ensure that your plan is a good one right from the start. If you already have a document that you have worked on and it just needs refining, you can call on professional business plan writing services to rework and refresh it for you.

When you make use of experts in this field, you can rest assured knowing that it will be quality work. Not only will the plan be well-structured, well-researched, and clear, but business plan writers will also ensure that their copy is clean.

They will have editors and proofreaders who make sure that there is a logical flow to everything. Between the writer, editor, and proofreader, they will also check for typos and anything that has been overly complicated.

A professional will know how to explain complex terms in a way that is easy to follow and understand.

A business plan is, as noted at the start, essential for all entrepreneurs. Without it, you won’t know what to do. You won’t get funding and you won’t be able to clearly explain your vision and mission for the future.

If you are serious about getting your business off the ground, a plan is a highly important part of the process. Any good business person and entrepreneur will ensure that they have one in place. It’s important to note that this is not a once-off document. It needs to always be fresh and relevant. Entrepreneurs should, therefore, ensure that they update their plans from time to time.

Keep Your Plans Fresh

There are a number of things that change over time. Perhaps your milestones are updated. Perhaps there’s a new gap in the market for your goods as services. Refreshing your plan on a regular basis ensures that you are always aware of what you have achieved, what you want to achieve, and how to get there. 

If it’s too big of a task for you to carry out on your own, you can always lean on a business plan writing company. They will be able to write the plan, plus update it down the line. However, you decide to create and update your plan is up to you. But it’s important to remember that it is a key part of your business, and it’s highly beneficial to the future of your company.

Keep this plan easily accessible at all times. You never know when a potential investor might come knocking at your door.

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