10 good reasons why your business needs a plan to grow
To prove that you’re serious about your business. A formal business plan is necessary to show all interested parties -- employees, investors, partners and yourself -- that you are committed to building the business.
To uncover new opportunities. Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business.
To assess the feasibility of your venture. How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture.
To determine your financial needs. Does your business need to raise capital? How much? The business plan creation process helps you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital and for effectively employing the capital.
To better understand your competition. Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company's competitive advantages.
To better understand your customer. Why do they buy when they buy? Why don’t they when they don't? An in-depth customer analysis is essential to an effective business plan and to a successful business.
To force you to research and really know your market. What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target market for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace.
To document your revenue model. How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model.
To position your brand. Creating the business plan helps to define your company's role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners.
To judge the success of your business. A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).