The reason why a business plan is needed to get investors is because they need factual and objective information for decision making purposes. A business plan is a road map for commercial success because it helps business owners to hold themselves accountable, monitor their progress and recruit future investors, according to Entrepreneur.
Better Goals and Prioritizing
A business plan helps entrepreneurs to set specific and measurable goals, then prioritize which objectives are most important and time sensitive. A complete business plan is the most valuable tool for helping entrepreneurs reach long-term goals and plans. A business plan gives entrepreneur’s their business direction, helps them define their objectives, maps out goal strategies and helps with risk management. The preparatory process helps to identify hidden risks, potential legal issues, financial obligations and inevitable operational constraints.
Sometimes, the biggest single benefit of preparing a business plan is just being able to focus time, energy and resources on the initial set up and organization of the business venture. Once a business plan is established, it’s a good idea to review in in order to review goal progress, assess whether strategies are working, adapt to new changes in the environment and maximize the most of new opportunities.
Increased Control
A business plan gives entrepreneurs better control over their businesses. A business plan directs, organizes, coordinates and facilitates key activities and operations. Regardless of how the plan is described, strategic planning is a systematic method for enhancing the success of any type of business venture. Writing and researching a business plan gives business owners the opportunity to learn about their industry, market and competitors. They will be able to identify financial and performance challenges in order to create strategies to avoid and overcome them.
Because business planning can seem overwhelming and time-consuming, many entrepreneurs may intentionally skip or skim over important parts. Vague plans and short-term business objectives will detract from long-term business success. Because the planning process helps entrepreneurs understand and explore the different forces and factors that affect business operations, they can establish stronger risks for vulnerable areas. A business plan helps with quality improvement activities because it establishes measurable objectives and creates a framework for eliciting feedback.
Standard Sections
There are benefits to each standard section of a business plan. First, the executive summary is an overview that brings together the main points and presents a concise snapshot of future success. The general description explains the company type, history and reasons and qualifications behind the start up. The products or services part describes their unique features and why customers will buy them. The marketing section is used to identify the niche market and demographic group through the marketing strategy plan.
The management section identifies the people who will run the business by describing their skills, experiences and core competencies. The legal part is used to identify the organization type, such as partnership, sole proprietorship or Limited Liability Company. The finances part states the business’ financial requirements, where the funds will come from and the cash flow and break-even point of the business. The operations section explains systems or processes that will be used and why.
Related Resource: Start a Franchise Business
Why a business plan is needed to get investors ultimately comes down to finances, operations and strategic planning. A well-researched business plan will show investors that the entrepreneur is serious about their business and it will convey the business idea while predicting profits and income streams.
