No matter how promising your idea for a new business might be, you will be very unlikely to succeed without a plan. A written business plan helps solidify in your mind what the business will be, and how you will structure it. Also, any owner or group of owners hoping to get a business loan will need to show the bank a good business plan.
Think of the business plan as the blueprint for your new business. The plan should answer four key questions:
1. What service or product will your business provide customers?
2. Who are your potential customers, and why will they come to you?
3. How will you reach those potential customers?
4. How will you pay the costs of starting the business?
With thoughtful, comprehensive answers to these questions, a business plan can act as a guide for the business’ owners, and help convince lenders or investors that the business is a safe, promising venture to put their money into.
Prospective employees may also be willing to sign on after reviewing a sound business plan, and the plan can also attract new partners to the company. In other words, a well-written plan can help a new business get the necessary cash and human capital it needs to put itself in a position to become profitable someday.
Besides that, the partners and management should be able to refer to the business plan after the business is off the ground. It can be a tool for long-term planning and help you evaluate your progress. Later on, you may find it needs to be adjusted, as you gain experience in the industry and your goals change.