This is one of the main questions I get asked most.
Do I need a business plan?
Well that depends on several things.
Not everyone who starts and runs a business begins with a business plan, but it certainly helps to have one. If you are seeking funding from a venture capitalist, you will certainly need a comprehensive business plan that is well thought out and contains sound business reasoning.
If you are approaching a banker for a loan for a start-up business, your loan officer may suggest a Small Business Administration (SBA) loan, which will require a business plan. If you have an existing business and are approaching a bank for capital to expand the business, they often will not require a business plan, but they may look more favorably on your application if you have one.
Reasons for writing a business plan include:
- Support a loan application
- Raise equity funding
- Define and fix objectives and programs to achieve those objectives
- Create regular business review and course correction
- Define a new business
- Define agreements between partners
- Set a value on a business for sale or legal purposes
- Evaluate a new product line, promotion, or expansion
Based on the information provided above, you may not feel you need a business if it’s simply about getting a business loan – STOP – let’s back up a bit, I think we ALL need business plans.
Learning from Error
I never felt the need to have a business plan because I knew I was never going to ask a bank for a business loan however, here are a couple of reasons I’ve changed my mind about why it’s important to have a business plan:
- Create regular business review and course correction
- Set a value on a business for sale or legal purposes
We should always know where we’re ‘going’ in our businesses. Writing down ideas, goals and where we would like to see the business next month or the next 6 months or even a year later is crucial to planning.
What if you ever decide to sell your business? Having a business plan together eliminates the pressure of doing it later or in a rush.
Last but not least, a business plan for legal purposes. I won’t even begin to tell you how crucial this is especially when you have a partner. Both parties should be at ease about the business, thier individual roles as well as other pertinent details.
It’s taken a few bumps and bruises for me to wake up to this, I say… ‘better late than never”
Get that business plan together! 
P.S. Create effective small-business marketing, Identify your ideal customers and create concrete action steps to attract, sell to, and keep them.
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