Why You Need to Have a Business Plan

When you're starting a business, there is so much to do that sitting down at the computer to formulate a business plan might not be at the top of your to-do list, but it should be.

A business plan is a written guide that will help take you from an idea to an operational business. While it may seem like a daunting task, creating a business plan is an important step to starting your business off on the right foot. By taking the time to create a business plan, you're giving yourself time and space to think about important details that you might not otherwise consider.

Main components of a business plan

Depending on whether you are looking for external financing (for example, getting a bank loan or money from an investor) or whether you are self-funding your business, your business plan will look different. Business plans that are used to secure external funding are usually much longer and more in-depth.

But no matter the use of your business plan, there are some main components that should always be included. These are:

• A summary of your business.

• The value proposition for your business.

• Services or products that your business will provide.

• A summary of your ideal customers.

• Financial information, including revenue and expense projections.

• A marketing plan.

Why you need to have a business plan

Though a business plan takes time to create, it's time well spent. Here's why it's important to have a business plan in place before you open your business.

Clarify your business vision

Before you start your business you won't have everything worked out. But it's important to have key points of your business vision clarified: what product or service your business will provide, how you plan to grow, what milestones you plan to reach. When you write your business plan you're creating a roadmap to help guide your first years of business. While everything likely won't happen according to plan, having this as an initial guide can keep you focused and help you find new ways to pivot when necessary.