Developing a business Plan

As an entrepreneur you should be familiar with the business plan, this is a document describing in detail the nature and objective of the business venture. It is vital to know how to draft a proper business plan for various reasons. Today we will only look at the importance of drafting one.

1. Sell the business to yourself
You need to be able to sell your idea to yourself since you are the most important stakeholder in the venture. As an entrepreneur you need to convince yourself that starting the venture is the right thing on both a personal and investment point of view.

2. Obtain investment funds
There are a number of private investors available that you could obtain funding from, whether its venture capital or informal capital.

3. Secure bank finance
Banks require you to have a written business plan when seeking a business loan. In order for you to stand a fighting chance at obtaining the business loan you need to construct a convincing plan. Banks have become wary to lending start-ups that are categorized as high risk, which is why a business plan has become an essential component.

4. Secure big contracts
As a small company seeking ongoing orders or contracts from large corporations, they are often met with “who are you? Everyone knows who we are so why should we do business with you”. In order for you to answer this question properly, you need to have a business plan.

5. Keep focused and motivated
As a small business venture grows and becomes more complex, a business plan can help keep everyone focused and motivated on the same targets and goals.

6. Attract key employees
Convincing the best employees can somewhat present itself as a challenge for small businesses. As a growing company you will need to present a convincing business plan to some employees in order for them to believe that the company is going to thrive in the coming years.

There are other plausible reasons for drafting a business plan; it can help you evaluate the chances of the ventures survival rate, or help you identify key components that can determine the success or failure of the venture. You may also use a business plan as an instrument to compare actual results against targets and goals.