4 Reasons Why You Should Write A Business Plan
Before we start this article, I’m going to make 5 guesses about you. Yes. You, reading this article.?
If at least 3 of these guesses are correct about you, then stay with me.?
You’re in the right place, reading the right article that will explain what a business plan is, explain the benefits of having one, and show you how to create a business plan.?
So, let’s start.?
What exactly is a business plan?
Forget all the big English (you’ll read that later), a business plan is a document that explains what your business is, what you sell or the service you provide, your potential customers & your plans to make money, beat the competition, and stay in business.?
It’s basically a document that helps a business owner record the plans they have for their business, and see the mistakes they normally wouldn’t see because a business plan makes you see the truth and think.
It’s one of the important documents that a business owner will show investors that want to invest in the business.
It’s also a document that guides a business owner, the manager of a business, and even its employees to stay true to the mission and the vision of the business as it grows and expands.
If you’ve gotten here and you already feel that this sounds like a lot of stress and unnecessary wahala, just go back and watch BBNaija or Jenifa’s Diary.?
The people who will benefit from this article are those that want to start a business the right way or are thinking beyond selling to 20 of their family friends. Yes, I’m talking about people that want to build businesses that can expand to states across the country and build a strong customer base. If that’s you, you can continue from here.
Now, let’s talk about the importance of a business plan.?
Why do I need a business plan?
You’ve probably heard about business plans since studying Business Studies in secondary school but you might not even know one business owner that has a business plan or see the importance, to be honest.
This is probably one of the reasons you don’t have a business plan already. I mean, Iya Risi doesn’t have one, the Igbo man in the market doesn’t have one, why should you?
That’s a good question honestly but before I give you actual, concrete answers, I need you to think of this: How many Mummy Risi’s kind of business do you know?
Has their business passed having one shop or 2 shops in their lives? Have they been able to expand to other countries or other states?
Have you ever heard that Oga Bello or Ogo Chidi has received an investment of over 5000 dollars in their business before??
When they die, have you ever seen their business do as well??
Most likely your answers to those questions are no.
Most businesses and business owners don’t like stress and they just want a business that will give them money day in, day out. It then makes sense that they can’t be bothered creating a business plan.?
Don’t get me wrong, having a business plan is not the only difference between successful, long-term businesses and others, but it is a huge part of it. A business plan spills into the other differentiating factors for the business that gets it. (I know it’s big English, no vex)?
A correct business model, clearly defined revenue-making process, marketing strategies, plans for financing, clear objectives, and mission that guide a successful business, all start from being defined in a business plan.?
I mean, look at it. Every big corporation started as a small business. Dangote Refineries, GIG Motors, were people that also started small.
Beyond reading this to learn how to write a business plan, I need you to think this way whenever it concerns your business.
What are the big guys doing differently?
For every Dangote there are probably 1000 Iya Risiikat doing the same kind of business and not making any serious progress.
Let me show you the difference that a business plan can make for your business and its importance.?
1. Useful for loan, grant, and investment opportunities.
One of the biggest uses of a business plan is for financial purposes.?
In fact, 3 out of every 5 people that Google ‘how to write a business plan’ simply do it because they need to apply for a loan, need a business plan document to talk to potential investors or other financial reasons.?
It is simple. Banks often require a business plan amongst other documents to consider small businesses for loans. This is basically the same thing with a lot of grant-providing bodies or institutions.?
For investment opportunities, investors need to see the objectives, plan for revenue, profit generation, competitive analysis, and business viability metrics to make a decision on investing in a business.
Even the value of a business that forms the basis of investment is often evaluated by numbers in a business plan.?
2. It’s a great tool for business operations & management
Having a business plan is one of the easiest business management hacks you can use, that will serve you in the long term.?
Having a business plan from the start will help you sort out who and how to employ workers, the kind of strategies you can use for your business, and the possibilities for growth and expansion.?
For example, imagine a brand like Mikano making ice cream or Dangote making aso-oke, that’s weird. A brand like Dangote can possibly expand and start making tiles but aso-oke is way off.?
A business plan will help you stay focused on the goal, help you employ the right kind of people, make the right kind of expansion strategies and so much more.
3. It helps you see the truth
So, the truth is people start businesses for different reasons, eg: sapa, lack of funds, pressure from parents and family because of unemployment, boredom, jealousy, sapa again.?
Now, with such a low barrier of entry, lots of people start businesses but less than 15% of these businesses will survive after 3 years.?
This can be because of different reasons like financial issues, lack of a strong business structure, a faulty business model, spiritual attack, village people, etc.?
One key factor is the lack of a proper business model which is what a business plan will help you craft.
When you sit down to write your exact business points, know who your competitors are, and determine all the ways you can possibly make a profit, it makes you see problems before they even start.?
That’s an advantage you will have that many others don’t before you even start the business.?
4. If you want your business to grow well and grow fast, you better get a business plan.?
This entire article is making a case for why you need to write a business plan and not take the easy way out.
Now,research (I promise it’s research and not me) shows that businesses that take the time to write a business plan are more likely to grow faster than those that don’t.?
Like I said at the beginning of this article, if you want to be like the rest and just live from day to day, you don't need a business plan in all sincerity, but if you’re looking to play for the long term, please create one.
I hope I’ve been able to convince and not confuse you on why you should create a business plan.?
If you want to read an easy step-by-step process on how to write a business plan, watch out for our next article.