Why Every Startup Must Have a Business Plan?
Startups asked many times why they need business plan if they are not thinking of raising money. Well, whether you’re just starting out or in growing stage, an aforethought business plan is the right medium to get you there.
When startups asked Prajakt Raut, Founder, Appliifi, an online platform that helps startups to create assessment reports of their business to explain why business plan is so important for every startup, he replied, “You all already know the one obvious reason that it is a must for fund raising, but there are so many other reasons to build a plan at the beginning of business. If you don’t have the one, make this priority to make sure that you work on the key things for growing your business every day with everyone’s efforts.” Prajakt Raut was addressing the startups’ queries during a ‘talk on setting up a pitch deck to attract investors’ organized by Chitkara Innovation Incubator in Chandigarh. He added, with a business plan in place, you can ensure that how to move further on to fix plenty of things related to business with an ease. But surprisingly, many business owners don’t know anything about the importance of a business plan. So, let’s take a look at some of the reasons that help you to figure out why a business plan is an asset whether you are just in incubation or growth stage or not planning to raise funding.
Better Understanding of a Business
By writing about your business and thoughts on paper, you can understand it little better. It is one among basic courses of actions that required to be taken to improve every business. A solid planning can give you an idea of alternative future scenarios and set specific goals along with the resources required to achieve these goals. Raut added it is a tool for understanding how to put together all available resources and monitor progress. It also makes you accountable for every action taken for the betterment of business.
Clarity on Related Things
When you start writing a plan, it allows you to think beyond investors’ needs. It clarifies about what resources you already have and where you can go with them. It also hints about what you are doing at this time and where your efforts will take you in the near future. Raut said, “Whenever you start creating a business plan, think like you are getting from one city to another and optimization of your route will help you reach there in less time.
Help in Deep Understanding of Market and Competitors
Although understanding a vast industry in one or two weeks is not possible, but business plan help you to note down some imperative areas which are exceedingly important to consider before really entering in any industry. It also helps in examine how your idea would fit into the market and what would be probability of success as it is a critical factor for every entrepreneur to consider. It also defines about who are your competitors and other crucial things that will help to stay in competition.
Another biggest reason is that it help you to stay organized and on the track always. If you have no idea where to go, you can easily get off-track and sometimes leads to failure. However when you start adding expense projections, revenue model and other things, it will help you to stay committed to your business’s long term goals.
Force you think about things you might not have any idea
It is great tool for the mental gymnastics. You add a lot of ideas on a paper after understanding realistic scenarios. It forces you to think about those things that you might not have even considered earlier. It also saves from wasting time on thinking a number of things together that might be a reason of frustration.
Foster Alignment among Team Members
“Team alignment is most essential tool to fly fast,” said Raut. Team members’ performance is hindered when they do not work together to produce results. In early stages, founders face challenges to develop a collaborative team environment because they fail to create a trust among team members. A business plan eliminates conflicts of interest among team members to make sure that they all work together toward achieve goals. However it is very important to avoid adding any miscommunications about business future plans.
Make you Accountable
Business plan articulate your vision. When you start writing a plan, you need to find answers for some standard questions and this thing can serve you as a guide for a number of confusions and hold yourself accountable for the future.
Business plan serve like a benchmarking tool. In what areas your resources may fall short? Where did you lack? Having answers for these types of questions in writing form put pressure on you to be focused to make company’s performance better.
Prajakt Raut concluded success of business depends upon all the related factors; however business plan is an effective tool to convince everybody (employees, stakeholders, investors etc) about your idea. It also helps you to make adjustments that take your business on right track. Prajakt also founded The Growth Labs and works as a volunteer with organizations like the iSPIRT and TiE. He understands investors’ perspective very well and helps startups in getting funding.