Series: Business plans – Part I: Why do you need one for your startup?

Welcome to our latest entrepreneurial series. This one covers business plans, with tips and advice on the best way to get your company moving with a solid outline in front of you. In this instalment, we’re going to look at why you need one in the first place.

Let’s dive in:

1. To force you to be honest about your idea: This is about calculating when your business will reach the point of making a profit – and what funds you need in place to get to that point.
2. To shed light on assumptions: Getting it all down in writing, and working it through, can illuminate some dangerous assumptions you may have made without being aware. Correct them at the planning stage.
3. To understand your market: Analyse market size, market trends, competition, then research who you are targeting as your customers, and how you plan to reach them.
4. To show seriousness: If you want to borrow money or appeal to investors then you need to show a solid plan. Beyond that, a plan also demonstrates your company’s viability to potential future partners and employees.
5. To find new opportunities: You may find new avenues for your products/services through the necessary brainstorming that a good business plan requires.
6. To facilitate change: Business plans are often misunderstood as static things that get put in a drawer once the real life of running a company begins. But being able to return to your plan, to rewrite it, enables you to see where you were, where you are, and where you need to go.
7. To reduce risk: Careful planning and analysis reduces the chances of pursuing the wrong idea, or the wrong market, and allows you to compare your approach clearly with other avenues you might take.

This wraps up our first business plan series. Next time we’ll look at how to design an effective business plan. And if you missed our previous series on bootstrapping your startup, you can catch up anytime by visiting our blog here.