5+ Why Every Entrepreneur Needs a Business Plan to Succeed

Shalom Solomon 5th May, 2021

German-American economist Theodore Levitt once said that

"ideas are useless unless used. The proof of their value is in their implementation. Until then, they remain in limbo".

Now, I believe that every business in the market started out as only an idea before manifesting into the company or small business we can see.

Therefore the idea to implementation route is the basic formula every business follows. But then more than 50% of these started businesses (according to Small Business Administration) fail before clocking 10 years.

Why?

There are a plethora of reasons why, infact, we would have a lengthy list if we are to ask every entrepreneur why his/her business failed. One thing is common with all these reasons why businesses fail though. All of them are directly or indirectly caused by a poor/ineffective planning or no planning at all.

Starting a business with an idea you are passionate about is good, great even, but as they say, "failing to plan, is planning to fail".

Let's say for instance, you dream of becoming "the biggest plastics manufacturer in Nigeria".

While it is very admirable, this is not a business plan. Your business plan would be the steps and strategies you plan to adopt to achieve your goal above.

That is to say, not having a business plan on ground as a business owner can be quite risky. You cannot run your business based on whereever the wind blows.

So, we would explore the various ways businesses and entrepreneurs can benefit from having a business plan.

Photo Credit: Pexels

The Value of a Business Plan

A business plan adds massive values to businesses. We would look into some of them below:

Decision making
Guides actions
Reduces Risks
Maintain focus
Set goals and objectives
Define strategies to meet goals and objectives
To source for financial aid

Decision Making

Business plans contain the set goals and objectives a business plans to achieve and the strategies to achieve them. When these are already laid down, an entrepreneur would be able to make decisions that go in line with it's plans and in the long run, benefit the business.

Guides Actions

In line with the above benefit, a business plan would guide the actions of a business. It would enable the business remain carry out actions that would lead to achieving of the business' goals and objectives.

Reduces Risks

Rash decision making and unguided actions are a sure recipe for failure especially for businesses both start ups and established. A business plan that has a financial plan, operational plan and marketing plan would reduce the chances of incurring risks that would affect the business negatively.

Maintain Focus

Business plans clearly define the direction a business is headed. So, even when strategies might be changed along the way, it would be done with the final destination in view.

Outline Goals and Objectives

The businesses that thrive and grow are the ones that set goals and pursue them. Writing a good business plan would mean that you will have to set goals and objectives for your business. These would serve as benchmarks or milestones your business would need to achieve within a specified period of time.

Define Strategies to Meet Outlined Goals and Objectives

The point of a plan is to strategize a way to get from point A to point B. Though these might be changed in the long run, planning how to achieve the set goals of a business is part of the benefits of a well written business plan.

To Source for Financial Aid

This is the most common function of business plans. Most business owners only bother with writing a business plan when they need financial aid. True though, investors would need to see the direction your business is headed and how you intend to get there before they trust you with their money. Issuing of loans and grants at times would also require the presentation of a business plan.

Conclusion

In addition to all these benefits, business plans enable an entrepreneur clearly define possible problems the business might encounter and strategies to combat them. Let's say, the industry for the business is highly populated and has serious competition. Through a business plan, you would be able to determine marketing strategies to meet up with competition and stand out too.

If you are an entrepreneur, get a business plan today.

Thanks for reading :-)