What Is a Business Plan and Why You Need One

When you think of a business plan, you probably imagine a three or four-page generic document outlining your plans. But a business plan is much more detailed than you might assume. Not only that, but its value is usually underestimated. 

Did you know that even 20% of small businesses fail in their first year of operation? Moreover, even 60% have to go out of business after just three years. 

There are many reasons businesses struggle to stay afloat. Some of them include poor management and inadequate market research.

But with an effective business plan, you can prevent this from happening to your business. What's more, you will be that much closer to achieving long-term success. 

To create the perfect business plan, you first must understand what it is, and that's precisely what this article is about.

What Is a Business Plan?

Let's start from the basics. 

A business plan is a standard business document. Not every business starts with one, but that is not a step in the right direction. 

Your business plan should include your goals for the future and how you plan to achieve them.

This document is packed with useful information regarding your business. This includes:

• Practical and general information
• Financial considerations
• Market research insights
• Marketing tactics 
• Business strategy
• Competitive analysis

These are just some of the sections your business plan should cover.

Look at your business plan as a starting point and a blueprint for your business. It doesn't matter if you're just starting out or if you've been in business for some time. 

Business plans are equally important for startups and already established businesses.

It's a signal to potential investors that you have a solid plan for the future. It shows you have done your research and you are prepared for the challenges your business will face. In other words, it shows you are a reliable investment. 

What Is in a Business Plan?

There are no set rules for how every business plan needs to look like. That being said, you should avoid making your business plan look generic. 

But, there are some guidelines you should follow when composing a business plan.

Every business plan should contain the following elements:

1. Executive summary
2. Business description
3. Market research
4. Competitor analysis
5. Products/services sections
6. Marketing strategies
7. Business strategy
8. Financials
9. General information
10. Future milestones
11. Conclusion 

Use these elements to create the perfect business plan. But try to make your plan reflect your business and what it offers. 

It's important to explain who you are as a business, what you offer, and what you plan to do with it. Next, explain how you will achieve your goals and in what timeframe. 

Talk about possible issues and challenges and how you plan to overcome them. Include essential details about your market, target audience, and marketing strategies. 

A section of your plan should be devoted to financials. This is one of the most important parts of your plan, which is why you should consider hiring a financial professional. 

This section includes financial statements and projections. Investors will be interested in this page when they review your business plan.

Your plan should be regularly reviewed and updated. 

Why All Businesses Need a Business Plan 

Regardless of how long you have been in business, a business plan is necessary for future achievements. The same applies to the industry you belong to. All businesses can benefit from a well-conceived business plan.

Here are some reasons your business needs a business plan:

• Creating a clear vision
• Providing a strategic direction
• Effective decision-making
• Resource allocation and financial projections
• Risk management 
• Measuring progress and performance
• Securing investments

As you can see, a business plan serves many purposes. It's a critical tool for guiding a business's development and growth. 

A business plan helps articulate the company's vision, mission, and objectives. It provides a roadmap for your business's future and how you plan to achieve it.

It outlines the strategies and tactics you will use to achieve your goals. This includes market analysis, competitive analysis, target audience identification, and marketing strategies.

This includes both short-term and long-term goals. That's why it usually includes financial projections for the next few years. 

How Can a Business Plan Help You Get Investors?

A good business plan is a gateway to financial success. But how can a business plan help you secure investments?

If executed properly, a business plan can:

1. Show viability 
2. Prove your financial potential 
3. Highlight your management team
4. Provide an exit strategy
5. Show risk mitigation strategies
6. Communicates professionalism
7. Show you are prepared for financial challenges

A comprehensive business plan outlines the viability of your business idea. It should show your potential for profitability and growth.

Your business plan should include detailed financial projections. This includes revenue forecasts, expenses, and cash flow analysis. 

These projections give investors insight into the potential return on their investment.

Investors want to know how they will eventually realise a return on their investment. Your business plan should include a clear exit strategy, whether it's through an IPO, acquisition, or other means.

Every business venture involves risks, but investors want to see that you've identified potential risks. More importantly, businesses must have strategies in place to mitigate them. 

Finally, your business plan serves as a starting point for discussions with potential investors. It gives them something tangible to review and discuss with you. 

Why Do Some Business Plans Fail?

As much as business plans can help you, they can have the opposite effect if not executed properly. 

This can happen because of:

• Lack of market understanding
• Poorly defined value proposition
• Inadequate planning and execution
• Ineffective marketing and sales strategies
• Weak management team

One of the most common reasons for business plan failure is not understanding the target market.

Businesses must address the needs, preferences, and behaviours of their target customers. If they fail to do this, they won't attract enough demand to sustain themselves.

A business must articulate its value proposition. Without a compelling value proposition, businesses struggle to attract customers. They also can't differentiate themselves in the market.

While having a business plan is essential, simply having one is not enough. The plan must be well-researched, realistic, and actionable. 

Many business plans fail because they lack thorough market analysis. They also don't include detailed financial projections or a clear strategy for execution.

Even if a business has a great product or service, it won't succeed if it fails to effectively market and sell it. Business plans can also fail if they don't include a comprehensive marketing and sales strategy.

The success of a business often depends on the management team. If the team lacks the necessary skills, expertise, or leadership qualities, it can hinder the execution of the business plan. This can ultimately lead to failure.

This is only one of the many reasons why you should hire a professional business plan development team. 

Hiring Experts

You don't have to write your business plan by yourself. You also have the option to hire professionals. 

Professional business plan development companies usually have a team of experts. They come with the necessary knowledge and extensive experience. 

They know all about business planning, market research, financial analysis, and strategic consulting. 

Business plan writers understand the components of a successful business plan. They can leverage their expertise to create a high-quality document. 

Business plan agencies also have financial experts. They know how to develop accurate financial projections. This helps show how viable and profitable your business is. 

Financial experts can create realistic financial models. This includes revenue forecasts, expense projections, and cash flow statements.

A professional business plan agency can help:

• Startups seeking funding
• Established businesses looking to expand
• Nonprofit organisations seeking grants

Creating a comprehensive business plan can be time-consuming. This is especially true if you lack experience in business planning. 

Hiring a professional firm allows you to leverage their expertise and resources. It saves you time and effort, ensuring that your business plan meets high standards. 

Business plan development companies can tailor their services to meet your unique requirements. 

Let Launch Crew Consulting Help Your Business Grow

A business plan is a vital tool for entrepreneurs and business owners.

A well-written business plan can help businesses secure investments and make effective decisions. It serves as a roadmap for the future of the business. 

Whether you're starting out or looking to take your business to the next level, you need a business plan. It's essential for the success of your business.

If you need help creating a business plan, Launch Crew can help you. We're a professional business plan development company. We make personalised business plans for businesses of all sizes and industries. 

If you want to know more about our services, feel free to contact us.