One of the most important things you can do before starting a business is create a business plan. Not only will a business plan be an advantage to your business structure, it can also be an informative tool that you can show to potential investors. A business plan does not solely focus on one aspect of a business; it goes in depth in many fields and helps you understand how your whole business fits together. Here are 8 advantages that a business plan will give your business:
1. Knowing Your Finances: Finances are obviously a very important part to any business. By using financial projects in a business plan it will assist in deciding how much startup capital a new business will need. Not only will financial projections show how much startup capital a business will need but they will also show revenues, costs and profits. This is an advantage to startup businesses so they will not run out of money in the beginning stages of starting the business.
2. Make your marketing goals: Marketing is imperative to every business. A business plan can reveal the best marketing strategies that will generate the largest return on investment. Knowing the most useful marketing strategies for a business will allow that business to create a marketing advantage over its competitors.
3. Standing out From the Competition: The competitive analysis in a business plan will explain what a business and its direct/indirect competitors do differently and it will give them the opportunity to take advantage of those differences.
4. SWOT your business: The SWOT analysis will sort out the strengths, weaknesses, opportunities and threats of a startup business. This will put into perspective how strong or weak a business is, and ways it can fortify and grow. Knowing these few things about a business will layout the reasons that the business will succeed or fail
5. Knowing what is driving change in your industry: Industry growth patterns will show if an industry is expanding or declining, or the trends that the industry is experiencing. This information will help a business decide whether or not to change business structure if their industry is declining. For example if Blockbuster understood and responded to the industry trend of subscription movie rentals through the mail 3 years ago, they may not have gone bankrupt.
6. Know who will make the business work: This section of the business plan is imperative to find out what experience and qualities that a business team needs to be successful. It is important to know how many employees will be necessary to first start your business. This will also help realize the amount of money that will be allocated to employee salaries.
7. Understand the Challenges to Launch: The barriers to entry for a startup business may be significant, like needing various licenses or technological barriers that a business may have. By knowing these barriers and figuring how to overcome them, it will be easier to get your business started.
8. Price your products right: The pricing strategy will let you know how much money you need to charge for your product or service to break even and eventually create revenue. A pricing strategy is an important advantage to your startup business because it will help ensure that you are not over charging or undercharging customers. The correct price strategy will ensure that a business is not losing money or potential customers.
These are just eight of many advantages that a business plan provides for a startup business. So if you are thinking of starting a business, one major competitive benefit and asset to your company is a business plan. This strategic analysis of your business will help strengthen many aspects of your business which will be beneficial now and in the future.