Why you need a strong business plan, even if you aren’t seeking funding
Startup businesses these days are formed and funded in all manner of ways. Where the traditional idea of someone who wanted to start a business having to go and have a lengthy chat with a bank, or try and garner funding from venture capitalists is still the process for some people, in the online business age some people start businesses that don’t really require much start up money, or go into business with friends and use their combined resources.
Business Plans When No Funding is Needed
As a big part of securing funding has always been being able to show a good business plan to potential backers, lenders or investors, it may be the case that if your business idea doesn’t require you to persuade anyone to give you money, you might think this step is unnecessary. After all, you know what the business is going to be and what you are going to do, right?
Well, in actual fact, having a proper business plan, rather than a vague, sketchy idea of how things are going to go, will help you immensely in starting your business, even if nobody other than yourself ever needs to see it. Here are some of the reasons why:
Planning and Budgeting
If your business idea is currently along the lines of ‘we will provide this service, and then profit’, you are likely to run into situations very early on when you will need to refine this. While you can do this on the fly, it is far less stressful to think things through before you start trying to operate your business. If you have planned what you will spend money on, how you will recoup this in your pricing, and how many clients you need to win or how many units you need to sell to make your business viable, you’ll be able to assess far more easily whether or not it is worth spending money on something when the opportunity arises. You should factor in your budget, even if it is tiny to begin with, and whether there are things you would like to spend on (like professional web design, advertising, accountancy and so on) as the business grows – what will these cost, and what is your threshold to start being able to pay for them? Are they overheads or will there be a return on investment?
Creating a business plan is also a good way to spot any areas that need more attention, or where there is a degree of risk. Encountering these as you go along makes them far bigger challenges than if you were expecting them and had ideas already in place for mitigating them.
Whether you create your own business plan, or get help from a professional, inputting everything you currently know about your startup to help them create something you can use, you should always have one – and you should keep reviewing it and updating it as your business develops, too. Even if you are the only person who ever needs to be convinced by your business plan, it is still a real essential for any start up to have.