The importance of a startup business plan
Are you a startup entrepreneur? If yes, then it’s time to get started on a startup business plan. The general rule of thumb is that everything that starts without a clear plan has more chance of failure than it has for success. Maybe you trust your memory so much that you don’t see the need for a hard-copy plan; you can remember everything you need to do, right? Wrong. Business plans are extremely important to a startup — just like planning is to any other aspect of your life.
Here are five facts in support of this argument.
It’s the backbone to business startup strategy
It’s only through having the best startup strategy, and executing it to perfection, that a startup is able to compete effectively within its niche.
But what is a business strategy without a well laid-out startup business plan?
In a plan, newbie entrepreneurs list all their business goals, outline their management structure, plan the human resource recruitment criteria, strategize employees’ compensation and benefits, and plan how to acquire new technology.
It defines managerial positions, their titles, their offices, and their core functions, to prevent duplication of roles and ensure a smooth running of affairs. A business owner can never make costly managerial mistakes when they write a startup business plan.
Startup business plans indicate where and when to spend your resources
One of the greatest challenges that startups grapple with is how to come up with a budget and prudently manage their limited resources.
It’s not uncommon to find a startup entrepreneur spending too much on human resource and later being unable to buy the much-needed tech that is necessary for the company’s future growth. With an elaborate startup business plan, however, entrepreneurs are able to budget for the little they have, cut down on the less important things, and spend money on the things that matter.
A startup business plan is a fundraising tool
If you’re a startup entrepreneur with a bigger dream than the resources at your disposal, then you probably have had to convince investors to buy into your dream at some point. Or, maybe instead of engaging potential investors, you tried to borrow money from banks and other lending entities to actualize your dream.
Unfortunately for you, not many people are willing to invest in a startup whose direction and purpose is unclear. Do you know what will convince investors and lenders to give you money? A well-drafted startup business plan.
A well-defined plan is proof that these people need to believe that you know what you want and you have a roadmap to the company’s future success. For example, if you need app funding, app developers must first design a working prototype to convince funders that the app offers a viable business opportunity.
Share your vision with your team
There is often no better way of explaining one’s mind than writing it down. A startup business plan helps new businesspeople to communicate their business dreams to their staff members, which in turn helps the members to own the dream.
Research shows that a startup whose target goals are fully understood by its staff, has twice the chance of success than the one whose dream is confined in its originator’s mind.
What are your sales targets? How do the staff members stand to gain when the targets are finally met? These are some of the things that will convince the most talented workforce to join a startup.
Review your initial ideas
When startup entrepreneurs write a startup business plan, it would be naïve for them to assume that it’s flawless. The secret to business success is acknowledging the fact that not all good ideas are workable and not all bad ideas are useless.
A business plan presents entrepreneurs with a perfect reflection of the business today and in the future, which is a good basis for self-evaluation. Entrepreneurs understand the strengths in their plans, the areas in which they ought to improve on, and the parts that they need to scrap altogether.
What’s more, when selling the startup business plan to funders and staff members, startup entrepreneurs get invaluable input from different people which only makes their business course even stronger.
When all is said and done, a business plan will not magically turn the tables to your advantage if you don’t work hard and commit to your business. Bottom line: write a business plan to reduce your chances for failure but be sure to complement it with enough funds, advertising, and everything else that your startup business needs in order to grow.
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