Entrepreneurs who are just launching a new business usually wonder, “is a business plan really that necessary? Is creating one really the best use of my time? The correct answer to those questions is YES. A business plan is vital for starting a new business. In fact, a business plan may take a lengthy period to write, needs you to have a considerable amount of data at hand, and it usually involves drafting out a long list of studies and researches you need to conduct.
Plus, not every business experts believe in the usefulness of a business plan. The result of a study conducted by Babson College, using 116 new companies, revealed that having a formal business plan before launching a small business does not influence the business’s eventual success, provided that it is not the type that requires outside funding.
Then again, another study revealed that entrepreneurs who draft formal business plans are 15% more likely to achieve viability than their non-planning counterparts. Several other studies have shown that while creating a business plan does not guarantee success, it indicates that entrepreneurs who plan are most likely to run a successful business.
Therefore, why not equip yourself with one of the progeny tools that a business owner could possess a plan. If you are still sitting on the fence, consider these three reasons why you should draft a business plan before launching your business.
1. Decision making
There are several aspects of a business plan that you cannot complete by sitting on the fence or not entirely committed. A business plan helps you get rid of those grey areas because you need to draft out specific data in white and black. Tough decision making is one of the trickiest and handy aspects of writing a business plan. For instance, if you have not decided on the exact type of product you want to sell and the prices, completing your plan’s services and product section will be challenging. Determining this information is valuable for the business planning process.
2. It may serve as a reality check
Drafting a business plan is usually the initial actual challenge for small business owners who intend to launch a new venture but do not want to consider that the idea has flaws. Therefore, writing a business plan may be a process of identifying defects, shoring up research, testing, and making the business more viable.
3. A business plan gives you new ideas
The discovery of new ideas, various approaches, and new perspectives are some of the most incredible things that can happen in a business planning process. A business plan is not just a lengthy, structured, and stiff piece of a document; it is the exact opposite of a growing, dynamic, and flexible tool that triggers your creative thoughts.
4. It helps creates an action plan
A business plan is a handy document for every business owner. However, when you utilize it as a tool for outlining action items, next actions, and activities, you are drafting out a breathing and living document of not only your current position nor where you intend to be, but also the directions required to get there.