Just a Piece of Paper? The Importance of a Good Business Plan

Many small companies, for the first time ever, are finding that they need to write a business plan. A few decades ago, this was unnecessary for “mom and pop” types of stores, but now even owners who have no other employees have the need for a business plan, and many people do not realize this until it is too late. Without a business plan, you can loose site of your goals and even fail to receive funding. A good business plan is very important, if not absolutely crucial, if you want to start a successful business.

A good business plan shows investors and employees that you are serious about starting your own business, and that you are willing to put the effort into making it work. When you approach a bank, for example, without a business plan, they see you as a risky investment. Clearly, to the bank officials at least, you have not thought this decision through. If they lend you money and your business fails within the first few years, as many new businesses do, they run the risk of losing money as well—you could declare bankruptcy or otherwise evade paying back your loan. Simply put, without a business plan you will seem unprofessional.

A business plan also answers the questions of potential moneylenders and investors before they have the chance to ask them. The most important part of your business plan to them will of course be the financial part, but they will also be interested in seeing your short-term and long-term goals. Are you planning to expand your business? If so, this could mean more income for you, which means that you will pay back your loans more quickly as well as be able to continue growing your business. Employees who are interested in working for your company will have questions as well that can be answered by your business plan. For example, how will the management team work? Employees will look for opportunities to advance within your company as well as be interested that you have your finances in order—no one likes to work for a company that ultimately will fail, after all.

A good business plan is absolutely necessary if you wish to start a new business. If you already own a business and have not developed a plan, now might be the time to do so. By having a working business plan available for anyone involved in your company you can set clear goals for the future and be sure to please your audiences.

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