Why Do You Need a Business Plan? 5 Things to Know

Close to 10 million new businesses were registered over the last two years. The pandemic made people realize that there are more possibilities than commuting to a job they hate.

Starting a new business is a time of hope and excitement. That can easily come crashing down in just a few months.

The reality is that about 20% of small businesses close up in the first year. About half make it to the fifth year.

If you’re getting ready to start a new business, write a business plan. Why do you need a business plan?

Read on to discover the benefits of business planning and how to create one.

1. Validate Your Ideas

Business owners get a moment of divine inspiration. They have an idea to start a business, and they rush to get it opened as soon as possible.

They have no idea if the idea is profitable or not. One of the main business plan benefits is that you learn if you can make money from your idea before you invest time and money.

2. Develop Pricing and Marketing Plans

The business plan contains information about the financial status, operations costs, and startup costs. It also makes you research the competition and the market.

That gives you the necessary information to price your products and market them to the right people.

3. Know the Business Risks

Starting a business is a big risk. You can invest thousands of dollars and there’s a 20% chance you’ll lose it all.

A business plan helps you understand the internal and external risks of the business. There’s the opportunity to mitigate those risks from the beginning.

4. Get Help Writing It

The reason why business owners don’t write a business plan is that it’s tedious work. You have to do a lot of research and writing. Business plans are at least 20 pages long.

The good news is that you don’t have to write the plan yourself. Get help writing the business plan. You’ll get the information you need without doing the hard work.

5. Don’t Let It Sit In a Drawer

The one mistake that business owners make is that they go through the trouble to write the business plan. They put it away and don’t look at it for a couple of years.

The business plan isn’t something to write up to get a loan. It’s something you write to guide your business.

It’s a dynamic document. Look through it regularly. Note if there are any market changes or issues you didn’t anticipate. Continue to let it guide you as you build your business.

Why Do You Need a Business Plan?

Why do you need a business plan? Well, if you don’t want to become part of the 20% of businesses that close in the first year, you need a business plan.

A business plan is a document that shows you what you’re really getting into. You learn about the market, competition, and the risks involved.

For more business planning tips, check out the Business section of the blog.