One of the most important tools of every entrepreneur is a good business plan. While a business plan is essential to entrepreneurship, not every entrepreneur sees the need for one. But what is a business plan? According to the Harvard Business Review, Entrepreneur’s Book “a business plan is a document that explains a business opportunity, identifies the market to be served, and provides details about how the entrepreneurial organization plans to pursue it”.
A good business plan helps entrepreneurs focus on the specific steps necessary for them to make business ideas succeed, but not only that, it further makes the path easier in achieving short-term and long-term objectives.
A good plan makes clear the resources you’ll need, and predicts financial results over a reasonable time. It also tells what’s required of you and your management team to achieve your goals.

For many years, startups were encouraged to write a business plan, whilst some took the advice, others did not. Those who didn’t soon realized that they couldn’t obtain outside funding without a business plan. Investors and lenders are meticulous about giving their money to any cause without possibly knowing the prospect of that venture’s success. But who would really want to put his money where there are only little or perhaps no prospects of success?

As a result, if you ask most entrepreneurs why they need a good business plan, they might probably tell you that they won’t get funding without one. But is that the only reason why we need a good business plan? Certainly not!
Below are some of the reasons why a good business plan is a must for every entrepreneur.

1. Fund raising: 

As mentioned above, potential investors will require you to present a written business plan before giving you money. They’d like to see a clear business and financial plan that shows prospect of success and how much money you will need to achieve that.

2. Discover potential weakness:

Showing your business plan to trusted and experienced individuals such as experts, mentors and friends will help you identify potential weaknesses, missed opportunities, baseless assumptions, overly optimistic projections etc. It follows that you may get useful advice from those people that could help you achieve your goals.

3. Helps you focus on the goal:

Writing a business plan will help you and your team to think through everything that will make your business succeed. It’ll help you to identify what you must do, who you should hire, what resources you need, who to partner with etc. A business plan gives you the clear vision of where you are now, where you want to go, and how to get there.

4. Decision making:

A good business plan aids you in decision making. Knowing what you want and how to get it is very important, you won’t have to follow the majority or wander, your mind is focused on your business idea and strategies.

5. Reach out to stakeholders:

With a business plan you won’t only raise money from investors, but may also lure potential employees and customers. With employees it will give them an insight into what you’re doing, what you want to achieve and how to get there, and importantly what role they might play in the process. Customers on the other hand will know what you offer and how far you’re willing to go to give them the best service or product.

A business plan is very important as such every entrepreneur must endeavor to have one.