Would you buy a car without ever looking at the specs, or jump headfirst into building a home without ever seeing a blueprint? Probably not! Unfortunately, many business owners approach their businesses with this mindset.
Much of the time, entrepreneurs get tied up in all of the logistical to-dos that demand immediate attention when opening a business. However, in order to prepare for potential roadblocks and to streamline your company’s vision and purpose, creating a business plan is crucial.
Check out the top 4 reasons to write a business plan and what it can do for your company:
1. Defines and Refines Your Market
One of the most common things that gets overlooked when starting up a business is defining and refining your market and audience. When writing a business plan, you have the chance to really research your market and figure out if you want to reach a particular niche. You may discover you want to target by gender, age, income, or even job status (i.e., business owners, veterans, etc.).
By narrowing down your market, you can tailor your marketing materials, website, services, and products to better meet the needs of your exact audience. You can also beta test what methods work and which ones are better left on the drawing board.
2. Irons Out Realistic Profit and Revenue Goals
Business continues whether you have time to sit down and create goals or not. However, it’s important to set financial goals to ensure that your company is accomplishing what you need and want in terms of finances. Really looking into your current costs and taking the chance to set realistic profit and revenue goals can help you decide what you want from your company and where to cut back.
3. Clarifies Company Mission and Values
When creating a business plan, it’s the perfect time to focus in on what your company’s mission and values are. Let’s take the example of TOMS shoes. When they began, they started with the broad idea of providing shoes to children in need across the world. They were able to define their mission with their One for One® plan. For every one pair of shoes they sold, they were able to provide a pair of shoes to a child in need.
As they’ve expanded their product model, they still stand by their One for One® mission, whether selling eyewear for eyesight, bags for safer births around the world, or coffee for clean water. Their company looks different than it did at the beginning, but it still stands by the same idea of improving the lives of others through their business.
By evaluating and zeroing in on your mission, vision, and values, you can create a model that can expand while still keeping with your original intent.
4. Narrows Down Elevator Pitch for Potential Partners & Lenders
You’ve probably seen Shark Tank at one point or another. There’s almost nothing more cringe-worthy than when an entrepreneur enters the “tank” and tries to sell a product or service without a well-formed plan or hard-hitting pitch. The sharks are hardly more brutal than when someone comes in unprepared to sell their company.
When you’re creating a business plan, you’re defining that hard-hitting elevator pitch. Whether you’re trying to discover new clients, expand your market with potential partners, or get backing from investors or lenders, a refined elevator pitch is crucial to prove you have what it takes to earn their trust and support.
Learn More About Writing a Business Plan
Want to write a business plan but aren’t sure how to? Look out for our upcoming blog post outlining how to write a business plan!