Tell Me Again… Why Do I Need a Written Business Plan?
Mention writing a Business Plan and the room will quickly clear!
Why is that?
“Writing” can be overwhelming, daunting, boring, and take valuable time.
As business owners, we want to DO rather than PLAN.
We want to work IN the business rather than ON the business.
If you need help with writing your business plan,
FREE Business Planning Guide (click here!)
So WHY does a business owner need to take the time to “write” their business plan?
First and foremost, the main reason is to give you, the entrepreneur, the clarity of the what, when, where, and how of your business.
Specifics are important in order to paint an accurate picture and to visibly portray your vision, mission, core values, strategies, and processes.
Your written business plan is simply a detailed story of all those wonderful ideas you have dancing inside your head.
There are other important reasons to have a written business plan.
During the writing process, keep in your mind that someone who knows nothing about your business may someday be reading it.
You may ask…… “WHY does someone need to “read” about my business when I can tell them about it?” Below are a few reasons.
One reason a written business plan is necessary is to obtain financing for STARTUP COSTS.
Because these costs occur before business operations, many entrepreneurs don’t have the resources to self-fund them. They need the financial lending of a banker/investor to help with those costs. A requirement by the banker/investor is a written business plan that they can read and learn more about your business.
Examples of start up costs that may need financing can include:
- Lease payments
- Purchase of a computer & office equipment
- Website Design & marketing tools
- Building upfit costs
- Costs of Professional fees
- Event and Networking dues
Every banker/investor will want to know how their money is being spent, why they should take the risk of lending their money to your business, and when they will receive a return on their investment. All of these questions should be answered in your written business plan.
The second reason a written business plan is necessary is to obtain financing for business GROWTH.
The average amount of time for a small business to begin making a profit is 3-5 years.
Additional expenditures may be needed during this stage of your business in order to grow.
Obtaining financial help from a banker/investor may be necessary instead of using your own business capital. A revised, written business plan that includes past performance will be required by the banker/investor before making their decision to lend you money.
Examples of Growth costs that may need financing can include:
- Hiring additional employees or temporary help
- Making capital improvements
- Purchasing a vehicle
- Advertising campaigns
- Purchasing equipment, tools, software
The third reason a written business plan is necessary is to apply for AWARDS or GRANTS within your City, State or Country.
I recently had the opportunity to judge the National Association of Women Business Owner’s 2017 Award in my state. As judges, we had no prior information about the business applicants. We were given the applicant’s written business plan to read and educate ourselves about the specifics of each business.
A written business plan should include:
- The Vision (future focused)
- The Mission (current focused)
- The Product or Service Description
- Marketing Strategies & Analysis
- Business Branding
- Customer Profiles
- Financial Models
- Tax structure
- Evaluation Plan
If you need help with writing your business plan, Download your FREE Business Planning Questions for a list of questions to get you started.
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