Why is a Startup Business Plan Important?
One of the first things a startup consultant will tell a new client is that a startup business plan must be devised, if such a plan doesn't already exist. If there is a plan, the consultant will want to go over it to see if it needs to be improved. Why is this such a big deal? It turns out that there are several benefits to having a good plan.
The first benefit that many will mention is that venture capitalists, banks, and other lenders all insist on one being in place before they'll lend any money. While this alone may be enough to motivate startup companies to come up with a business plan, it's only the outer layer of the onion. Lenders have found that businesses are much more likely to succeed if there is a plan in place, and this is what drives them to make the demand to have one.
A business plan should include basic facts about the company and its product or service, and how it will serve its intended market. Then, it needs to explain how the company is going to turn this opportunity into money. After that, it's time to get into the details. Who are you going to hire to help you make it happen? What financials do you have and how do you intend to increase them? In this section, you need to have some specific numbers. You should also make a projection about future expenses and sales, even though at this point, this part is likely going to be mostly guesswork.
Business plans should also start with an executive summary, or overview of the plan, even though the actual writing of this section often comes last.
When you write a startup business plan, you are forced to bring your ideas from the realm of pure dreaming into a firmer and more logical form. Just the act of writing out the plan can help you expose overlooked areas, better see if your financials will really work, and help you flesh out vague concepts. Any problems that are discovered can then be worked around or fixed, and you're less likely to be blindsided by them.
These are just some of the reasons lenders insist on a startup business plan before they'll put up any money. Startup companies often find other benefits to having a plan, such as being better able to figure out which steps to take at any given point.
For help in devising your business plan, work with startup consultants who offer this service. This can make it much easier to go from a blank paper to a fleshed-out plan.