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Why Do We Need a Business Plan?


Some business owners tend to fail without any reason, as they think. But actually it turns out that their business became unsuccessful because they lacked planning and analysis of their business activities. However, most of the businesses, which have a well - developed business plan, are becoming more successful with a time. Business plan is usually considered as only a way to raise your funds. In fact, the business plan is a living document which consists of much valuable information: it is useful for monitoring business progress, recruiting employees, and making even small decisions concerning your business in future. One of the greatest advantages of business planning is that it considers all sides of your business, making it easier to run.
The right business plan is a useful tool for learning. For example, if you have a small cheesecake factory and you produced 1000 cheesecakes, but demand appeared to be less than that, you can see what mistakes you did in the past and see the reasons for them. It might lead to excess capacity as well as losses in you net income. While working on business plan you will notice that you need to produce way less cheesecakes, so the next time you would not repeat the same mistakes.
Moreover, with the help of business planning, you can really understand your customers’ needs and find answers, which will lead your business to the bright future. What do your customers need? How much are they willing to pay for your product? What exactly do they like about your product so you could know how to attract the customers? are the main questions which will be answered with the use of your business plan, since you will be able too see the overall and realistic situation of your business.
Even though you just started to develop your business or are at a planning stage before start-up and you are operating by yourself, eventually you may have some partners with whom it will be essential to work on the same page. What would happen if you are already done with your part of the job, and your partner is not? It might lead to some complications, like getting behind the schedule and releasing your product on a different date than announced. The business plan will get everybody evolved and will help partners to work with the same speed, being aware of what all parties involved are doing.
Furthermore, a well-developed business plan will also help you to attract some valuable investors. Showing investors the results that you are planning to achieve in the future and the means of performing these results will make them more willing to invest exactly in your product or project. With a business plan you are demonstrating that you keep your business on track as well as you are being realistic about it.
Moreover, business plan is not something that is difficult to create. It does not mean that it has to be 30 pages long; it can be simple and short. The most effective business plans are the ones that are updated constantly, regarding business growth or changes. Your business plan should include a realistic picture of your business as well as environment it operates in; determining your present and future goals. So it is definitely better to think twice before deciding to skip such an important part of your business activities.

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