What Is The Importance Of A Business Plan

What Is The Importance Of A Business Plan

Have you been thinking of writing a business plan? Perhaps you keep wondering, what is the importance of a business plan if I intend to get into business? In this article we share some key components of a business plan which make it an invaluable business strategy document. A business plan is important in so far as it assists you to crystallise your business idea. It also accords you the opportunity to assess your resolve to enter into a given business. A business plan will help you to keep your ideas focused which will go a long way in shaping a chosen plan of action. The blue print document is essentially a business map. Can we then really dispute the importance of a business plan?

A business plan as a safe space to make business mistakes

When writing a project proposal you have the liberty to make mistakes on paper which you can be corrected before entering the actual market place. The significance of a business plan lies in the process of laying down your business goals, describing your product/service and market penetration strategy. As you explain each element in concise detail there are instances you will notice flaws and errors in your idea. That is a good opportunity to revisit and revise that section of your business, and crystallise it.

You could be planning to start a maize farming project but you are not aware of the different categories in maize farming. While collecting data you realise maize farming can either be for silage, milling or to be sold as green maize. This in itself alters and refocuses the initial business idea as you try to figure out which might be profitable for you.

Business planning generates a list of start up requirements

A business plan will help you know the resources required to start your project. You can easily sum the total costs of starting a business and project when you might start making profits. Knowledge about your initial start up costs assists prospective business owners to guard against under-capitalisation and early cash flow problems. Such business problems are usually the norm in situations where activities are started without understanding and forecasting business uncertainties.

In agribusiness you need to be ready for a possibility of pest and/or disease infestation which poses a threat to yields and farm profitability. Business planning is therefore relevant so long as it informs you of the cost associated with your business idea. It will also assist you assess and experiment on alternative viable strategies which can be adopted to have a healthy cash flow in the early stages of your business.

A proposal will help you communicate your idea to stakeholders

The process of starting a business requires that you initiate and build relationships with relevant stakeholders. A business idea needs to be communicated in a manner that is concise and easy to understand and a business plan serves exactly that purpose. A prospective business owner needs to be able to show his entrepreneurial prowess and managerial ability in how he/she communicates the respective business idea. This is important because stakeholders usually have different interests prompting them to enter into business with you. You want to make sure your funding partners, employees, and suppliers fully understand your business concept and the general direction of things. If stakeholders know what you intend to do, they will gladly help you take on the mission.

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