The Importance of Writing a Startup Business Plan

The Importance of Writing a Startup Business Plan

A startup business plan’s importance cannot be overemphasized. If you want your business to be successful and profitable, you’ll need to have a clear understanding of your strengths, customers, and competition. These elements are fundamental to developing a winning business strategy. Writing a startup business plan will force you to address these issues early.

A common misconception is that you only need a startup business plan if you need a loan or investors—this is not the case!  Writing a business plan will help you organize, strengthen, and refine your initial ideas and strategies.  If you choose to write a startup business plan, the biggest beneficiary will be you, the business owner.

Most anyone who is a current business owner or entrepreneur will tell you, writing a business plan will be the best business decision you can make.

The Importance of Writing a Startup Business Plan Cannot Be Overemphasized

A business plan is a way to logically articulate your thoughts. Being able to do so is an essential prerequisite to starting a business.  Why would you start on a journey if you don’t know where you’re going AND how you’re going to get there?

Most businesses fail due to lack of capital—which is really just a lack of planning. If you ask yourself these tough questions when you first start writing your startup business plan, it will likely pay off in the end:

• Am I going to need to try and get a loan or do I need the financial backing of an investor?
• How am I going to convince a bank or potential investors to help fund my business?
• How much capital will I need?

The answers to these questions should all come from the process of writing a business plan. It is important that they do!  Not having a business plan is like flying a plane across the ocean without knowing how much fuel you’ll need before you start.

A Common Misconception: You Only Need to Write a Startup Business Plan if You Need Outside Capital

One of the biggest curses of self-funded businesses is the lack of discipline required. Yes, you may not need to write a startup business plan for the sole purpose of attracting investors, but you do need a way to clearly and logical organize your thoughts.

An unfortunate and common mistake of self-funded business owners is believing that if you don’t need outside money, you don’t need a startup business plan.  There is a significant difference between having enough funding to “start a business” and having enough to sustain a business until it is cash flow positive – which can be years. A startup business plan will help you see how much cash your business will need until it can sustain itself.

Biggest Beneficiary of a Business Plan is the Business Owner

Writing a start up business plan requires “reconciling” all the interrelated parts of a business.  How much will I sell?  How much can I produce?  How many people will it take to ‘make’ that much?  How much marketing will it take to bring in the number of customers required?  Finally, how will all of these things work together to make the business successful.

Writing a startup business plan transforms an idea into a “how to” manual, allowing you to chart your course from point A to point B, and then revise and fine-tune that strategy until it’s as strong as possible.

A well written startup business plan takes into account the size of the market and the strength of the competition.  Too often, these factors are given scant attention.  A properly written startup business plan will force a disciplined approach to taking these into account and will make you an expert on your business in your market.  This is the knowledge you will need to actually succeed.

The Best Decision You Will Ever Make

There are two ways to detach the emotional high about the idea of starting a business from the reality of what it will really be like:

1. Quit your job and invest your life’s savings into the idea
2. Write a startup business plan

It should be no surprise that the failure rate is much higher among those who opt for number one. Even if writing a startup business plan ends up being the event that talks you OUT of staring your business, the decision to write the plan will have paid off tremendously. Writing a startup business plan is the only way you can make an educated, informed, intelligent decision about whether now is the time for this business, in this market, by this person—you!

For more help on every section of your business plan, browse the information found on our site and utilize our business plan outline.