There are scores of reasons why you need to have a business plan, the most important being:
1. When you establish a new business you need a plan to ensure that you take the right steps. The business plan lists what you have to do, the resources you need and the expected outcome.
2. A business plan must accompany a loan application. Lenders will want to go through a business plan to get the relevant information.
3. If you are seeking investment for a new or existing business, investors will require a business plan to assess your business prospects.
4. You need a business plan to expand your business. It will help you create a strategy and to allocate resources according to your priorities.
5. You need a business plan even if you plan to sell your business. It helps potential buyers to understand your business and to assess its value.
6. At times, it may be necessary to assess the value of your business for taxation, estate planning, divorce, inheritance, etc. A valuation expert will look at the business plan to find out the nature of the business and its value.
7. A business plan can help you to communicate your business objectives to your management team, your employees and to new recruits. Parts of your business plan can be included in training programs also.
8. You can use your business plan to share information with the professionals you deal with. This can include your attorney, accountant, consultants, etc.
8. Selected parts of your business plan can be used to establish goals for new alliances.
9. A business plan can help you to decide about the justification for hiring new employees. It can be used to determine how many people will be needed, what they will do and how much they will contribute to the business.
10. A business plan will help you to decide about the assets that you need for running your business. If you are thinking of renting premises, for instance, your business plan will help you decide whether you can justify the fixed expenses that are involved.
11. A business plan can help you to share your vision and your goals with important people in your life. These include your spouse and your partners. You may be too busy to realize the importance of keeping them informed about your plans.
12. As you business grows, you will have to think strategically and to communicate your plans to everyone who is involved. This will help you to set specific targets for your managers and to see that they are fulfilled. You cannot afford to have vague plans that you dont communicate clearly.
13. A business plan helps you to think about the concept of displacement, which says that whatever you do is something else you dont do. Small business strategy is based on this concept, though most people have never heard of it.