The Importance of a Business Plan in Entrepreneurship

In the classic novel ‘Alice in the wonderland’, Alice comes to a crossroad and asks the Cat;

“Would you tell me, please, which way I ought to go from here?”

“That depends a good deal on where you want to get to.” replied the Cat.

“I don’t much care where,” added Alice.

“Then it doesn’t matter which way you go,” replied the Cat.

This conversation between Alice and the Cat captures the problem of not having a goal and plan for your business. Not having a business plan means you don’t care enough about the future of your business so it doesn’t matter which way the business goes. The course of your business will therefore totally be determined by circumstances instead of a vision or goal and day-to-day activities of the business are likely to be haphazard and reactive.

To be a successful entrepreneur, you need to have a business plan. A business plan is a document that contains your company’s background, product description, marketing plan, competitor analysis, SWOT analysis, operational plan and financial plan.

Having a business plan will help you to focus on how to operate your new business, and give it the best chance for success. Therefore, business plan writing is quintessence of any curriculum on entrepreneurship training.

Writing a business plan allows you to have a clear indication of what you’re doing, and where you are going; you get more clarity about an idea, as well as the execution plan. A business plan helps you to understand the industry you are venturing into, in an in-depth manner, before your start-up. It will enable you to brain-storm on things you may not have, and think critically about and the industry (business) you are going into.

A lot of ideas sound great on paper and even in discussion, until when you start adding the numbers. A business plan makes you to think through the numbers, making sure of the possibility to hit your revenue and profit goals.

Writing a business plan is an ideal way to ensure that everyone in your team is aligned with the current and future plans for the business.

A business plan ensures that you think and create a long-term vision and strategy for your idea. It helps you stay organized, remain on track and remain committed to your business’ long-term goals. It provides benchmarks that you can use to track your performance and make mid-course corrections, in the course of business.

A business plan can be used as a résumé; you can design one to introduce your business to investors, suppliers, vendors, lenders and others. It is a necessity to raise funds for a start-up business, because a business plan is the document that gives the details on the commercial potential of your idea or business, based on which financing decisions are made.

A business plan is the written guide to your business’ success. You can have others prepare it for you, but it is advisable to be the one developing the plan; using others for assistance, because the plan reflects your image and views of the business. The process of developing the plan is perhaps, much more valuable as a learning experience than the plan itself.

Don’t start a business without a business plan because according to Benjamin Franklin, — ‘If you fail to plan, you are planning to fail!”.