Here’s why you need to write a business plan as a new entrepreneur
If you’re new to entrepreneurship, an intentional business plan will guide your efforts and ensure you have the right resources in place to make your business successful.
This blog post will explain the purpose of a business plan and why it’s important to write one as an entrepreneur. We’ll also dive into the key functions of a business plan along with how to use it in the real world. Your business plan is only as valuable as the degree to which you engage with it over the long term. Let’s begin!
The purpose of a business plan
Why it’s important to have a business plan
Key functions of a business plan
How to use your business plan in the real world
The purpose of a business plan
If you’re in the process of getting a business off the ground, the last thing you want to do is write a lifeless business plan using a clunky template because you feel you “have to.” These kinds of plans end up collecting digital dust on your computer as opposed to being the helpful tool they have the potential to be.
Your goal here is to develop a business plan that feels true to you and your entrepreneurial goals. You want it to be useful. Think of your plan as a living and breathing document that you’ll continue to engage with and evolve along your journey.
Your plan should inspire you and help you clarify your next steps.
Why it’s important to have a business plan
Your business plan will serve many functions. Here are 10 reasons why writing a business plan is essential for every entrepreneur.
1. Test your business idea
Many entrepreneurs hit the ground running without adequately testing their ideas. Before you invest considerable time and money into your business, think about how you could develop a prototype or stress test your potential service offering in some way. Conducting customer research will also help inform the development of your business idea.
2. Determine your vision
A business plan will set the tone for the trajectory of your business. With a proper plan, you’ll be clear on where you’re going and how you’ll get there. If you’re new to entrepreneurship and you want to develop a vision statement for lasting success, check out our blog post on how to write an intentional vision statement.
3. Lay a foundation for success
If you’re planting a garden, the quality of your soil is paramount to the success of your seeds. The same is true for business. A business plan will ensure you have the right resources, skills, and people in place to see your vision through. It will also help you identify gaps early on so you’re able to be proactive in filling them.
4. Focus your energy
Many entrepreneurs struggle with competing priorities. Having a clear path to success outlining the various stages of your growth will ensure your energy will be channeled into the right places. Your time and energy are limited as an entrepreneur, so make sure you use these resources wisely.
5. Know your target market
A solid business plan will help you identify who your target customers are and how to best reach them. You’ll define key attributes like where they’re located, what matters to them, and what their values are in relation to your product or service. You’ll also determine how large your market is, which is an essential prerequisite for determining your profitability.
6. Develop your business model
The success of your business lies in choosing an appropriate business model. Your plan will help you determine what products and services you’ll offer to customers, and at what price. It doesn’t need to be complicated, but understanding how you make money and deliver value is fundamental for all entrepreneurs.
7. Build a marketing plan
Sales are the lifeblood of a business and therefore it’s essential to understand how you’ll brand your business and connect deeply with your ideal customers. Your business plan will outline key marketing channels, strategies, and tactics that build connective tissue between your company and the people you most desire to serve.
8. Get your business funded
Many businesses will need outside funding to get off the ground. Regardless of whether you’re pursuing government grants or venture capital, a concrete business plan will show funders that you have what it takes to be successful.
9. Know your risks
There will always be some risk in starting a business. Understanding your potential liabilities and determining ways to overcome them will help you feel more confident as you move forward. Your business plan should include a contingency plan for these various risks.
10. Establish compelling goals
Finally, your business plan will help you clarify your goals. As an entrepreneur, you should know what you’re trying to achieve along with the necessary steps to get there. Also, your plan should include clear deadlines to hold you accountable.
If you want to support with goal-setting, check out our blog post on how to set business goals you’ll actually achieve as an entrepreneur.
Key functions of a business plan
Prepare for the future
Your business plan will allow you to forecast what will happen in the future, especially when it comes to your finances. It’s powerful to know how your business will grow and evolve over time, and develop growth strategies accordingly.
Plan for different scenarios
The great thing about a business plan is it allows you to consider various options for growth and select the one that makes the most sense for your business. Your business plan will arm you with information about your industry, competitors, customers, and revenue potential, and from there, you can make solid decisions.
Align your team
A business plan will keep your team accountable to a common goal. If you’ve developed a solid plan, it will become a way to keep your people motivated and inspired. Your business will flourish when everyone is working in the same direction.
How to use a business plan in the real world
Write it in a format that works for you
Contrary to popular belief, it’s not always necessary to write a business plan in a Word document. In fact, it can be valuable to explore other business plan mediums and pick one that feels true to you. Perhaps you want to create a more visual business plan in a slide deck. Maybe you feel compelled to map out your business plan on paper. If this resonates, our guided journal for entrepreneurs, Bedside Business Plan, will help you “journal your business plan” and build a foundation for lasting success.
Revisit your plan regularly
Your business plan is only as valuable as the degree to which you use it. Reference and update your plan regularly based on actual results. We recommend looking at your business plan monthly, but you can determine a cadence that works best for you and your business. The more you revisit your plan, the stronger it will become.
Make your business plan part of your operations
Think about how you could leverage your business plan to better manage your team and inspire business growth. You might even consider creating a simple one-page business plan that you display in your office or workspace. The more you integrate your plan into the running of your business, the more valuable it will be in aligning everyone’s efforts.
