If you have a startup, or starting one, you may have heard conflicting ideas about whether you need a business plan or not.
Well, let me make it very simple: yes you do.
It is very important for you to have a business plan for a variety of reasons. The main cause of all this confusion is a trend that came about recently declaring that business plans are dead.
However, those types of business plan myths are not only uninformed, they’re also quite dangerous. This is because of the crucial role that business plans play.
That’s why today we’ll look at the top reasons why you need a business plan for your startup.
#1 For yourself (and your team)
The primary reason why you need to create a business plan is actually quite selfish—so you can have a strong document for yourself (and your team).
You see, the business plan allows you and your team to all be on the same track in consideration of where you want your business to go. It will also list the crucial steps you have to take in order to achieve those goals.
Your business plan will outline your strategy, what your priorities are and the exact steps that you and your team will have to take in order to get there.
Without the business plan, which is in fact a reference document for your business for the entirety of your business life, you may just end up keeping all your business ideas in your head.
This can create a lot of confusion on your management and team in general. If the idea is only in someone’s head, it first of all isn’t well-thought out.
Secondly, it may not translate well to others, as they can’t get the complete picture. So the other person may understand the idea very differently to how you are communicating it.
#2 Help you decide your budget
Another important thing about business plans is that they force you to think about what you can and can’t afford and when.
The very process of creating your business plan from scratch will force you to really delve into the details as far as what your startup has and needs. This will help you look at the startup’s budget not just for the moment, but also one, two, three or five years in the future.
Because your business plan will be (should be!) well-researched and organized, you’ll be able to find out exactly what you can afford to buy now and later.
#3 Additional funding
Of course, the most popular use for business plans is to get funding. If you have a great business plan, you will be able to secure funding from various sources.
Investors and bankers will need to know that your business idea is not just great in theory, but also has the numbers to back it up.
Is there a place in the market for it? Will there be enough customers? A good balance of competition?
Whether you’re getting angels or VCs to back your startup, or you’re getting a loan from the bank, you’ll need to have these details ironed out.
Your startup business plan
For these simple reasons listed above, it’s important that you create a great, interesting and well-researched business plan.
You’ll be able to get your team on board, set your budget accurately, and find multiple sources of funding.