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Why Are Business Plans Important?

Writing Business Plans

Why Are Business Plans Important?

There's a reason why we have business plans. This article examines why business plans are important. In fact, we've got six good reasons to write a business plan.

Why is a business plan important?

The success of your business depends largely upon the decisions you make. A business plan allocates resources and measures the results of your actions, helping you set realistic goals and make decisions.

You may have asked yourself these questions: Do I need a business plan? Why should I spend my time and energy drawing up a business plan?

Remember, first and foremost that lack of planning leaves you poorly equipped to anticipate future decisions and actions you must make or take to run your business successfully.

To be sure, a business plan is important. A sound business plan serves multiple purposes:

Business Plan as Reality Check. The process of putting a business plan together, including the thought you put in before you begin to write it, forces you to take an objective, critical, unemotional look at your business project in its entirety.
Business Plan as Performance Tool. Your written business plan is an operating tool which, when properly used, will help you manage your business and work effectively towards its Success. Your business plan will allow you to set realistic goals and objectives for your company's performance, and, if maintained, will also provide a basis for evaluating and controlling the company's performance in the future.
Business Plan as Message Sender. The completed business plan communicates your company's ideas and message to employees, outside directors, lenders, and potential investors. outside your company. A business plan helps you do that in an organized, credible manner. Also, the process of planning helps you determine if your vision is realistic, and tells you what you need to do in order to achieve it.
Business Plan as Motivation Tool. The development of your business plan is one of the best ways for you to communicate how well you understand your business and describe your vision of your business. Without proper planning, it becomes impossible for you to get all of your employees reading off the same page of the book and generating energy through high levels of team work. It is impossible to motivate people when they do not know where they are going or what they are trying to achieve.
Business Plan as Management Development Tool. Putting together your business plan will help you develop as a manager because it can give you practice in thinking and figuring out problems about competitive conditions, promotional opportunities, and situations that are or may be beneficial or harmful to your business.
Business Plan as Road Map. Your business plan, once it is completed, will give you and your employees goals and direction: a roadmap to follow in guiding your business through good and bad times.