People
tend to wonder why are business plans so important? If I know the concept of
the business in my mind, why do I need to spend time trying to analyze the
industry, determine my competitive advantage, research the competition, and
develop marketing strategies? In an article as to why business plans are
important, Alan Gleeson quotes Lewis Carroll's Alice in Wonderland:
"Would
you tell me which way I ought to go from here?"
"That
depends a good deal on where you want to get to," said the Cat.
"I
don't much care where--" said Alice.
"Then
it doesn't matter which way you go," said the Cat.
Tim Berry
and Stefan Topfer both have similar views on why business plans provide
direction. Tim Berry is an American entrepreneur and published business author.
He is the founder and chairman of Palo Alto Software and is often known as the
"Obi-Wan Kenobi of Business Plans." He is currently the official business
planning coach at Entrepreneur.com. Stefan Topfer founded WinWb International
Ltd. in 1994 and also serves as its CEO. He has extended the boundaries of the
Internet by simplifying the life of small businesses.
Both
experts state that the primary purpose of a business plan is to define what the
business is or what it intends to be over time. By understanding what the
business is and where you want to go with the business, you're able to
recognize what you need to do to continue to move forward. It doesn't matter if
you're the sole business owner or starting a corporation, business plans can
provide a reference point for you to return to. It shows whether or not the
business is capable of making a profit. This is important when attracting
investors.
A good business
plan establishes goals and benchmarks as the business grows. This allows for
management to provide specific objectives, tracking, and then follow up.
Business owners should want to share their business plan with everyone,
including investors, employees, and even friends and professionals. Your
business doesn't sound appealing if you're explaining the intricacies from your
head. It's easier to understand and share your business when you have
everything written down on paper.
The most
important and critical aspect of a business plan is how much research is put
into them. Researching the competition, the industry, and how much money you
stand to make from your business shows that you are an expert in your related
field. As an entrepreneur, I plan to use the research studies and industry
statistics to determine what my business goals are and how to beat out my
competition.
Berry, T.
(March 6, 2013) Entrepeneur. 15 reasons you need a business plan
Retrieved From http://www.entrepreneur.com/article/83818
Gleeson,
A. (n.d). BPlans. Five reasons you need a business plan Retrieved From
http://articles.bplans.co.uk/starting-a-business/five-reasons-you-need-a-business-plan-2/364
Topfer, S. (February 25,
2011). Nasdaq. The importance of business planning Retrieved From
http://www.nasdaq.com/article/the-importance-of-business-planning-cm59436
