Importance of Business Plan
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Institution
A business plan is a written document that contains business goals and how they can be attained at a set time. Before starting a business, it is advisable that one should come up with a business plan to enable him or her to see the progress as the business begins to grow. Business startups usually need a business plan to guide them when starting up a business for them to succeed. It’s, therefore, important for them to draw a business plan to guide them throughout the business period.
Business plans can help startups perform a number of tasks when starting up their business. The one is that it helps in decision making. Drawing various businesses and decide on what to do and avoid making big mistakes. With a business plan, a startup is able to seek funds and loans for the support of the start of the business; in this way, it acts as proof that one really needs financing (Suprapto, 2018). With the plan on paper, one can convince great investors to give them capital for their start.
Startups, can also see the whole business whereby one gets a whole picture of what the business is comprised of; these may include the expenses one is likely to come across, the capital required to start up a certain business, how to avoid losses in the business how to make profit among others. With this, one gets a better understanding of how to operate in a broader way in order to avoid losses.
Startups set up a goal to achieve in a business with the help of the business plan whereby one works towards achieving that certain goal (Cerderia, 2018) . This keeps one to always work harder towards achieving his or her goal hence drawing the business into a better place. A business plan guides one in identifying the target market of the products from the business, and the entrepreneur will, therefore, be required to do market research, which may offer an insight to the customers and the competitors as well (Cerdeira, 2018). The research, therefore, enlightens a startup on marketing activities.
Setting priorities is also another guideline from the business plan in which one will always do what is right and most important. The startup will also allocate a lot of time for the business once it becomes priority efforts and even the resources towards the growth of the business.
A business plan enables one to reduce risk. The risks in business can be easily managed when tested once the business plan is drawn. Through this, revenue and expenses are identified and projected as well as understanding the market and the competitive nature in it. The plan may also be used in the valuation of formal business transactions; this enables the planner to establish how worth is the business. Therefore, it outlines how the company is going on, how much it will cost, and the amount it will produce.
In other cases, business plans enable one to set targets for alliances and how to communicate with those alliances broadening the market for the business because this may play a part in attracting reliable suppliers and customers.
In business, one may encounter some weaknesses; to avoid this, it’s good to draw a business plan from the because it will enable one to identify the weak areas.
A business plan helps the startups in budgeting for the capital to be used in the business, by doing so, the person carrying out the company can know the amount that he or she requires to start up a business. Budgeting helps to control the cash flow allowing an entrepreneur to invest in new opportunities at the right time. It shows one what she or he spends the money on and how that spending will be financed.
References
Cerdeira, S. (2018). The business plan in the context of corporate entrepreneurship: a literature review. Notas Económicas, (46), 99-115.
Suprapto, H. A. (2018). PELATIHAN Pembuatan Proposal Rencana Bisnis (Business Plan) Bagi Siswa Madrasah Tsanawiyah Nurul Hikmah Dan Smp Al-Ihsan Guna Meningkatkan Kemampuan Berwirausaha. Abdimas Siliwangi, 1(2), 81-88.