Why Every Startup Must Have a Business Plan? 

Why Every Startup Must Have a Business Plan?
Why Every Startup Must Have a Business Plan?

Why Every Startup Must Have a Business Plan? 

Startups are asked many times why they need a business plan if they are not thinking of raising money. Well, whether you're just starting out or in the growing stage, an aforethought business plan is the right medium to get you there.

When startups asked Prajakt Raut, Founder, of Appliifi, an online platform that helps startups to create assessment reports of their business to explain why a business plan is so important for every startup, he replied, "You all already know the one obvious reason that it is a must for fundraising, but there are so many other reasons to build a plan at the beginning of a business.  

If you don't have 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 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 the 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 a little better. It is one of the basic courses of action that are required to be taken to improve every business.

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 the 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 shortly. 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.

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Help in Deep Understanding of Market and Competitors

Although understanding a vast industry in one or two weeks is not possible, a business plan helps you to note down some imperative areas which are exceedingly important to consider before really entering any industry.

It also helps in examining how your idea would fit into the market and what would be the probability of success as it is a critical factor for every entrepreneur to consider.  It also defines who are your competitors and other crucial things that will help to stay in the competition.

Stay Organized

Another biggest reason is that it helps you to stay organized and on track always. If you have no idea where to go, you can easily get off-track which sometimes leads to failure. 

However, when you start adding expense projections, revenue models, and other things, it will help you to stay committed to your business's long-term goals.

Force you to think about things you might not have any idea

It is a great tool for mental gymnastics. You add a lot of ideas to 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 wasting time thinking of several things together that might be a reason for frustration.

Foster Alignment among Team Members

"Team alignment is a most essential tool to fly fast," said Raut. Team members' performance is hindered when they do not work together to produce results.

In the early stages, founders face challenges to develop a collaborative team environment because they fail to create trust among team members.

A business plan eliminates conflicts of interest among team members to make sure that they all work together toward achieving goals. However, it is very important to avoid adding any miscommunications about business plans.

Make you Accountable

A business plan articulates your vision. When you start writing a plan, you need to find answers to some standard questions and this thing can serve you as a guide for several confusions and hold yourself accountable for the future.

Benchmarking

Business plans serve as 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 the company's performance better.

Prajakt Raut concluded success of a business depends upon all the related factors; however, the 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 the right track.

Prajakt also founded The Growth Labs and works as a volunteer with organizations like the iSPIRT and TiE. He understands investors' perspectives very well and helps startups in getting funding. 

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