Why is a Business Plan mandatory for Entrepreneurs?

During discussion with an entrepreneur, I realized how disastrous it could be without a business plan for a venture with one’s own capital. Some people think if it as a requirement for submission in any financial institution like bank, but what they don’t understand is that it is a tool for putting everything together in our business, for accountability and keeping track of the progress. 

Business plans can also influence or aid in developing other strategies such as sales, recruitment and financial planning. In short Business Plan is written document that describes the nature of business, sales, marketing and financial strategies with a profit and loss projection. 

Let’s discuss some critical reasons, why a business plan is mandatory. 

• To help us properly define a new business venture, identifying the needs of customers and what we need to proceed with that idea. 
• To aid in determining the feasibility of our idea, helps us create a financial model and project the realistic aspects. 
• To help us understand and estimate the required startup budget and aid us in taking a decision regarding the funds. 
• To persuade investors by describing the viability of their investment. 
• To make an effective marketing strategy by identifying the promotional opportunities and evaluating, researching and then analyzing the target audience.  
• To monitor our competitors and help us anticipate their activities by researching and analyzing them. 
• To serve as a tool to track routine operations and help you get it back on track if derailed from its intended course of actions. 
• To act as a growth engine and depict the business performance. 
• To effectively organize and structure the manpower needed for the startup idea. 
• To attract professionals by giving a clear overview of the startup objectives. 

With regular updates in our business plan we can be able to foresee the economic plateau of the relevant industry. In short, our business plan gives us a clear direction.  

Here is link to a short animated video on “How to write a Business Plan”, I found it very amazing. Credits for this video to the Business Wales/Busnes Cymru channel on YouTube.