Business Plan: What Is A Business Plan, And Why Is It Essential?
Business Plan is essential to maintain mental flexibility and not lose critical vision and judgment.
Reasons For The Vitality Of A Business Plan
For new businesses, the business plan defines the need for a product or service, which underlies the business initiative, presents the structure that supports this activity, and, most importantly, the potential inherent in the activity.
For existing businesses, the business plan (internal business plan ) is the basis for an annual and multi-year work budget, formulated after an in-depth analysis of the business environment in which the company operates.
A business plan for an existing activity must inherently be updated from time to time and adapt itself to the changing reality.
Alternatively, a business plan is required for an existing company in cases where there is a need to improve or adjust processes in the company or when the company is facing new business activity or expanding current business activity and seeks to conduct an orderly feasibility study before actual implementation.
For a business idea to take shape, whether it is an idea for starting a new business or developing an existing business, or for an existing business to maintain its success over time, it must be based on solid foundations of long-term planning and controlled company. “Conservatism” is one of the keywords for the business, and its meaning in the business context is positive and not harmful. The business plan document is a roadmap and compass for the future and over time.
“Innovation” and “entrepreneurship” are also essential keywords in the business world, and it is certainly possible and desirable to “think big” on the way to success. However, once you have taken the initiative and taken the first step on the road to realizing the idea or venture, back up your moves in a detailed and concise business plan, which will serve as a reference point and anchor at the various decision nodes you will encounter along the way.
Other reasons for the vitality of the business plan :
- Is a source of power based on knowledge – it requires conducting research and gathering as much information as possible concerning all aspects of business, starting with information about the geopolitical environment in which the company operates, such as laws, regulations, and regulations that are expected to affect business conduct, through information about the competitive environment And the potential of the market and ending with the collection of complex numerical data, aimed at shedding light and providing the ‘bottom line’ regarding the viability of starting a business or making a business move.
- Creates a sense of certainty – this is true, a business plan, like other fields (medicine, for example), is not an exact science, but its existence allows walking on an expected route and with eyes wide open. It defines your business horizon and eliminates the need to rely on gut feelings when estimating your business’s chances of success because it provides measurable numerical data.
- Reduces and defines risks – Conducting in the business world involves decisions of risk versus opportunity. Every financial investment involves a particular risk, and investors are well aware of this, but the higher the risk, the greater the chance – the profit potential. The business plan quantifies the existing stake in the business initiative and illustrates the profit potential: draws black on white the risk versus the chance.
- Uniform language – the business plan serves as a unique communication channel in which the language, terms, and codes incorporated in it are clear to both the entrepreneur and the investor.
The recommendation to any entrepreneur who has an innovative idea for a product, project, venture, service, or solution is to go through a preliminary process of careful and rigorous examination. This testing process, when properly managed, requires a lot of investment of time and resources. Still, this investment is certainly worthwhile – not only does it reduce the risks, both for the developers and the investors, but with a thorough examination of all aspects and proper planning, you will win. Reaching the stage of fulfilling your vision and watching it become a successful and sustainable business, which may also “create” for you some money…