Most entrepreneurs understand what a business plan is at its most simple level: a document that organizes a companys goals and their strategy for attaining them. A business plan is generally quite detailed, including the strategy for all divisions of the business, as well as market research that defines the external environment in which the business will compete. Most people look at a business plan as being solely written document, and most do not analyze it any further than this. If youve never written a business plan before, you may not realize the additional aspects and benefits of the business plan writing process. Trust us, as we are about to show you that when it comes to a business plan, just like the venerable Optimus Prime, there is more than meets the eye!
First and foremost, a business plan is a SYSTEM. A S.Y.S.T.E.M. is a process that (S)aves (Y)ou (S)tress, (T)ime, (E)nergy and (M)oney in building your business idea into a complete business strategy. This system is more time intensive up-front, but it will save you both time and money once you have launched. By going through the business planning process, you will be able to prevent and correct mistakes in your strategy that you would have not otherwise seen until you were in business. If you find mistakes after youre already in business they will generally result in extra costs and missed opportunities for revenue. If you discover strategic mistakes in your business plan, all you have to do is hit the backspace key and update your strategy.
Secondly, a business plan is one of the most compellingtools available to enroll others in your mission. Once youve written your business plan, youll most likely realize (if you didnt already) that you wont be able to successfully build your business without the help of other people. These people might include business partners, employees or investors. Each of these types of people will have different questions and needs that you must answer and fulfill before they are willing to work with you. Without a comprehensive business plan, you may find it difficult to get help in the areas where you need it most, and in reality, this could make or break your venture. Whether these stakeholders physically read your business plan, or just talk to you about your mission, going through the business plan writing process will empower you to answer these questions completely and specifically, with the ability to back up your answers with documentation. This will prove to be invaluable to you and gives you a much greater chance of success.
Finally, a business plan is going to be an internal tool that will guide your company through the first several years of business. When you finish your business plan, you will have created a cohesive business strategy for the first 3-5 years of your business. When you launch your company, you can follow this document as you run your business. You will have already laid out your internal operations, your marketing strategy, your product delivery, and allocate your resources in your business plan, so all you have to do is execute the plan. Of course, the strategy you laid out in your business plan wont be perfect, especially after several months or years after youve launched. Business planning is an iterative process, because you will be constantly learning more and more about your company and the environment you are competing in. You will start to see new opportunities to undertake, as well as gain a more complete understanding of the environment you are operating in. In order to continue to use your business plan as an effective tool, you must go back and update it as necessary. It is good practice to look it over every few months just to see where you are at compared to where you predicted you would be, and will aid in planning for the future.
In conclusion, a business plan is indeed a written document, however contrary to popular belief there is a lot more to it than just words and paper. A business plan is one of the most advantageous toolsthat one can have to work with when starting a new business. The benefits associated with creating a high quality business plan will pay more dividends in ways that many entrepreneurs overlook.