The Importance of a Business Plan For Entrepreneurs

A business plan is an indispensable tool for an entrepreneur and not only because of its importance to the fundraising process, but because of how it helps businesspeople crystallize their strategy and evaluate their process. These are the three major reasons to create a business plan if you are a hopeful entrepreneur.

Fundraising

Most literature on business planning focuses on the need for a plan to encourage external investment into the company, whether it is through loans or equity investment. Most funders will not consider putting money into a company without seeing a well-written, convincing business plan. An entrepreneur must make sure the plan speaks in terms the funders will understand, and meets their requirements for the qualifications of the management team, funding requested, and financial return.

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Setting Up a Sound Business Plan

Business plans can be one of the most effective tools for the small business owner who is starting, growing and even managing a business. The business plan can have multiple uses and advantages. Provided is a list of important reasons to create a business plan:

  • The business plan is simply a must have for small businesses
  • Helps make important business decisions
  • Offer a reality check
  • Create new ideas
  • Creates a plan of action

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Write Your Own Business Plan? Or Get it Professionally Written?

There are definitely some cases where writing a business plan yourself is preferable and others where an expert third party may add value to the process.

Writing your business plan yourself

For micro businesses raising small amounts of investment (say under £50,000) this is likely to be the best approach. Apart from anything else it doesn’t make sense spending 10% or 15% of the funds you are trying to raise on getting someone to help you write a plan! Most high street banks offer on-line applications or software templates to help you. Just beware that you may have to repeat the application process several times in different format if you don’t have a stand-alone business plan.

» Read more: Write Your Own Business Plan? Or Get it Professionally Written?