Importance of Drafting a Business Plan
A business plan is critical for any new business venture, but is often neglected as the Entrepreneurs do not completely understand the depth of the benefits that they provide. Some of the major advantages that a business plan could provide are listed below
The business plan can be used to specify and manage measurable objectives such as sales, website visitors, new product launches, consumer reviews etc. This can be used to define success of the business in measurable terms.
A Theoretical Approach
The business plan can be used to refine the approach for critical aspects of business such as the potential market, COGS, sales, business operations, process etc.
Adapting and following a particular strategy is difficult in a daily routine. With the help of a business plan, important points of the strategy can be highlighted. It acts as a reminder and avoids deviations from the strategy.
Obtaining Venture funds
Drafting a clear business plan increases the interest of external investors to invest in business. The business plan reflects the passion of the entrepreneur along with the future growth, which are the key criteria the investors concentrate on.
There are priorities for each aspect of the business such as the business growth, management and financial health. A business plan sets a foundation for these aspects and revises the priorities for them as the business matures.
Tracking activities and the order in which the activities needs to be carried out can be organized through the plan. For example, a new product launch and the marketing related activities for the product launch should be conducted simultaneously.
A business plan can be used to keep track of the deadlines and dates that are set for each operation. Tracking milestones is highly important for a business growth.
It provides a clear picture on the responsibilities and tasks to be assigned to each person in the business. This helps the business to be in track
Managing and tracking team is easier
Several business entrepreneurs acknowledge the need for team reviews. On the other hand a survey showed that employees are against review systems. With the help of a business plan, the review system can be automated by setting goals and course corrections when they are not met.
Better Financial Management
Managing cash flow is highly critical for any business. The business plan also covers the cash flow forecasts and helps in estimating the sales, costs incurred, expenses and other liabilities.
Risk management and course corrections
Business plan provides us with ways to be proactive in business rather than being reactive. The business can be regularly tracked and the risks can be assessed. Necessary course corrections can be carried out. It sets expectations and provides a clear future course.
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