A good business plan is a written document that portrays or explains the objectives of a particular business and how this business plans to achieve its aim or goals.
On the other hand, a good business plan is more of a blueprint or a kind of a roadmap in a written form which is written for a firm or a business especially from an angles of marketing, financing and general operations of the business.
A lot of businesses out there began without a business plan but eventually, they began to show signs of crumbling. This is because the entrepreneur, from the inception did not declare in the documented sense, the aims and objectives which he wishes to achieve at the startup.
As an entrepreneur, if you don’t have a good business plan things will began to enter into eventual complexities, it leads to a loss of direction which can cause the backwardness of the business.
Now, there is a saying which says that he who fails to plan is indirectly planning to fail! Failure to plan is also a plan on its own but that is a pseudo-plan, only that it leads to failure.
A good entrepreneur must learn to plan for his business especially at the inception to draw a plan of why the business exists and what are the ways with which to run the business so that it keeps existing and continue to perform the purpose for which it was created.
Top 10 Reasons Why You Should Have A Good Business Plan
Here Are The Top 10 Reasons Why You Should Have A Good Business Plan
1. Be Sure Of Your Financial Needs
One of the reasons why a good business plan must be created before starting a business is to be certain of the financial demands of the business. I will give an example, someone wanted to start a computer business center without a business plan but all he had was a haphazard list of the machines to buy and in this, he had made a quick budget of 650, 000 naira.
So, he budgeted for a photocopier machine, two printers, three sets of computer, shop rent, furniture for the shop and fittings and he also budgeted for the burglary proof for the frontage of his shop and then, he applied for a loan of that amount exactly because that was his source of capital.
It was after he applied and bought all these equipment he realized that little things like laminating machine, binding machine, staplers/staple pins, scissors, laminating films and rims of papers matter.
In this case, if he had made a business plan to substantiate the fact that he would be offering basic computer services in all its ramifications, he would have involved these petty easily forgettable but absolutely important elements in his plan. This enables the business man to know how much will be needed after all financial requirements have been documented.
2. To Attract Partners And Other Investors
A lot of people in our society today, have some stock of wealth which they want to invest into profitable businesses in expectation of future profits. A business with a good business plan will attract an investor.
With carefully stated business objectives and good blueprint of how the objectives will be achieved will keep an investor’s mind at rest that where he is about to put his money will yield desirable results in the nearest future. Having a good business plan too will make the business a cynosure to partners with similar interest.
3. To Judge The Success Of Your Business
Now, as an entrepreneur that want to be successful a good business plan is paramount. A business plan is a documented “would be” of your business. Therefore, it is in this sense, a record that can always be referred back to after a while for one to be able to determine if there has been success in the achievement of stated objectives.
So, it serves as a document that one can always get back to in the inquiry into how far one has gone with the achievement of the earlier stated goals.
4. Catalyze The Collection Of Business Loan If Needed
One of the major requirements of being able to request for loans from financial institutions is that the business must be able to provide its plan.
So, the financial institutions require this in order to be ascertained that the business has the characteristics it is said to possess and will be able to yield back the refund of the loan at the agreed time. A financial institution that gives loan does it so that it can make profit too, while loaning a business.
If a business plan is not tendered as a proof to showcase the authenticity of the business, then one is denied the opportunity of acquiring loans at needed time. Therefore, a business plan is a must have for a business with prospective of acquiring services from financial institutions.
5. To Win Business Grants And Government
I know at least, of a renowned foundation known as Tony Elumelu Foundation whose aim is to empower entrepreneurs. Most people who have been able to win grants from this foundation already had a solid business plan from which they make their proposals.
Once in a while too, the government decides to empower small scale and even large scale enterprises, those who enjoy these business aids are those who have a good business plans and have been working on it.
So, this means that one of the reasons for which one must have a good business plan is to be able to acquire grants and aids for one’s business when the need arises.
6. To Reduce Business Related Risks
I want you to note that every business that is aimed at making profit is associated with risks. A business plan will make the risk involved in a business minimal. This is because, while making a business plan, a lot of factors must have been put into distinguished considerations.
For example, one of the aims of having a business plan is to be able to adjust for losses that one may encounter in the process of running the business. Loss are inevitabilities in businesses but when well planned for, the possible loss will be minimal because an expected blow is received with less pain but a sudden unexpected blow could cause maximum damage.
So, a good business plan have the strategic ability to predict losses in case they occur and through extensive organization, these losses would be well planned for.
7. To Increase And Foster Focus
A business without business plan as it goes overtime, could make the managers/entrepreneur/proprietor lose focus. This is because a lot of the objectives set to be achieved from the beginning have either been forgotten or are not well catered for.
A formal business plan for a business serves as a guide for the owners, controllers and investors to always have a revisit of the set goals of the business so as to foster focus on every angle of the business, not to be deviated to only one area of the business while the other areas are suffering.
A business plan, indeed, creates a kind of manual that can guide every new person in the business on how it is run. Sometimes, there may be change of partners, new investors or even employment of new staff the business plan therefore acts as a guide for all these stakeholders.
8. For Better Understanding Of Prospective Customers
A business plan automatically puts into analysis, in the process of its creation, the in-depth behavior of the customer who are expected to patronize the business, it will create a guideline that will answer questions such as what makes the customer want this product or service? What makes them want more? What makes them buy less sometimes? What could attract them more or repel them?
With these questions answerable, the business plan makes it easy for the businessman to understand the needs of the customer and how to manipulate things to keep the market flowing positively in the right direction.
9. To Keep One At The Top Of The Competition
Even the smallest scale businesses have business plans. A business plan doesn’t just keep you afloat the competition, it allows you understand the prospectus of other businesses in line with yours and how to keep being alive and fighting in the competition.
So, having business plan gives one the idea of how to maneuver to the right direction while plotting how to win in the competition and not left lagging.
10. To Determine The Nature Of Your Revenue
Your purpose of starting a business in the first place is to use money to make more money. What the business accrues of income is the revenue but when costs are remove from the revenue, profit is achieved.
In business, one must be able to know the nature of the revenue, that how much will come in when combining different units of factors of production and how fast these revenues will be coming in.
Only a good business plan makes it possible for one to determine the nature of expected revenue. A person who has a business plan for his business will be able to plan financially since the model of his revenue is already known. Cost can be controlled easily.
There are so many other reasons why one must have a good business plans but the enlisted above are the foremost purpose while one should strive to have a business plan.
A business can last for generations with the tendency to be passed unto generations upon generations and hence, making it stand the test of time is a necessity and for this to occur, one must first observe the primary action of elongating the business through galvanization with a good business plan!