Do I need a business plan?

Setting up a new business entails so many variables from cost of production, service suppliers, pricing, marketing, distribution, recruitment, changing market conditions and funding that no genius could know what the financial outcome of all that mix might be, without putting some structure on it.

One of the least popular elements of starting a business, developing a business plan is also one of the most crucial. Though failure rates for start-up businesses vary, estimates of 90% failure rate within first 2 years are common.  Failing to plan is a fundamental flaw in start-up businesses.  We know and understand all the excuses.  “We’re too busy doing to be planning”,  “the time is right to launch now, not when I’ve lost time doing a business plan” ,  “ I know what I’m doing in my head, I don’t need to write it down”.  No matter how small you plan to start or how big or quickly you think you can grow, developing your business plan will increase your chances of success for a number of reasons.

• It tests your concept/hones your idea.
• It can be used to apply for funding/supports.
• It will be used to benchmark your success.
• It maps the most effective course of action.
• It creates a sense of urgency to achieve targets.

Unfortunately, business plans are often only written with a view to applying for finance from the banks or for state funding and/or supports.  While it is imperative to develop a really well thought through and executed business plan in order to apply for funding, it shouldn’t be the only reason.  The actual development of your business plan which includes inter alia clear thinking about your product or service, how you are going to market it, who will buy it and for how much and how you intend to grow the business is as important, if not more so, to the success of your business, as the pursuit of funding. Only when you have really answered these questions can you put together a financial plan built on each and every element outlined.  A financial person should be able to look at your financial plan only, and almost tell you what the rest of your business plan contains! They are written and numerical reflections and validations of each other. It’s not necessarily the case that you will sail to success by following your business map directly but you certainly have a better chance than if you set sail without a map at all!

Now you know why you need a business plan lets look at how to write a business plan