Why should I write a business plan?

Business owners often feel they don’t need to write a business plan because they believe they can keep track of their plan in their head. This task can be difficult to accomplish because there are numerous considerations involved in planning a business. The structure of a written plan makes it more likely that all aspects of the business are considered and that nothing important gets missed. The time and energy required to write an effective business plan may seem like a large cost to the business owner at the time of writing, but the benefits received from the writing and business planning process far exceed any of these costs.

There are three main reasons business owners should write a business plan:

1. Most banks, investors and financial institutions require a written business plan to obtain funding.
2. The business plan serves as a roadmap for the business, forcing the owner to set goals and objectives for development and success as well as outlining strategies and techniques that will be used to attain those goals and objectives.
3. A written business plan can prove that the business will work “on paper” and it adds validity to the business idea.

There are several benefits of a written business plan that are listed below.
A business plan:

• Communicates what the business is, where it came from and where it may go
• Increases chances that overlapping business activities get considered
• Addresses factors that may affect the business, better preparing the business owner to deal with situations as conditions change such as regulations, legal business structure, funding, marketing issues and labor needs
• Allows the business owner to monitor business performance against goals, expectations and forecasted financial statements
• Provides the business owner with a clearer and more focused idea of what can be expected from the business

Although the benefits of a written plan may not be realized immediately, it is well worth the effort of the business owner to write out a plan. Business owners can use the written plan to obtain funding, communicate goals for the business and evaluate actual performance in comparison to objectives outlined in the plan. It is important for business owners to remember that their written plan is not set in stone. Business plans can and should be changed and updated as needed to fit the business, its performance, value and future direction.