A business plan outlines an organization’s road map, highlighting milestones to work towards thus allowing an entrepreneur to have visible goals to achieve. Versatility of a business plan considers the market feasibility connected to factors like current market analysis, anticipated future market potential, and risk of competition or potential buyers and sources of revenues. The market research and study conducted in producing a well-defined business plan or proposal determines the viability of a business idea or concept avoiding wastage of valuable resources. Having a business plan in India is crucial to defend a business idea or concept nowadays. The challenge of starting up a business in urban India is tougher due to the rising number of young entrepreneurs in the country. Potential uniqueness in a business idea or concept highlighted through its business plan may win the support of many potential investors. The importance of having a business plan in India is pointed out below:
- ATTRACT POTENTIAL FINANCING
Starting up a business requires substantial amount of funds to ensure continuous growth of a business. Business plan can be modified to be given as a loan proposal or venture plan for bankers or potential investors respectively. For an entrepreneur, business plan backs up their business ideas in a more strategic focus by highlighting the uniqueness of the idea itself. For example, India government supports new budding entrepreneurs by providing loans to start-up their business. The competition is quite high, thus to select the most promising business ideas, the business plan has to be tailor made to attract investors. Not having a good business plan portrays negatively on the entrepreneur itself. An entrepreneurial vision is best described by a business plan detailing its strategies and tactics to gain maximum profit return.
- BLUEPRINT FOR SUCCESS
Having a business idea in your mind and a business plan written is totally different. A business idea without a business plan does not weigh all the potential downfall of the idea accurately. Whereas a business idea with a business plan ensures various aspects of the business is carefully studied along with its plan of action. Business plan is a blueprint allowing entrepreneur to look at the larger picture of the business itself. By understanding the inter-dependencies of factors like product development, working capital or long-term fixed costs, an entrepreneur can enforce a strategic alignment for success. Even if something goes wrong, the contributing factors can be much easily identified and rectified. Potential negative outcomes and the possibility of failure can be greatly reduced with a well-planned in advance plan of action or contingency plan.
3. SYSTEMATIC BUSINESS MANAGEMENT
Daily routines and interruptions may cause any business to lose focus and to go off tracks. By having a well detailed business plan, the priorities of an organization can be kept on track to ensure quality output. Allocating efforts and resources strategically requires a systematic business management. Managing an organization is no easy task; making one wrong decision would cost the entire organization. Besides finance, time is also crucial in planning a strategy. Steering time, effort and resources requires proper game plan to reap out its full profit. Business plan acting as a game plan assist business growth, management and its financial health too. It sets a foundation for any entrepreneur to base their strategies and revising it accordingly. For example, SWOT analysis holds a great value of information about a business strengths, weaknesses, opportunities and threats which allows managing team to work its strategies and tactics accordingly.
4. DETECTS POTENTIAL PITFALLS
A business plan is not merely to be used to get loan approval or potential investors; it should be constantly reviewed and revised accordingly to the growth of a business. It plays a crucial role by keeping track of key metrics take gives an entrepreneur a more clarified picture of an organization’s measurable objectives. This allows businesses to make course corrections and to react proactively. For example, factors like Indian rupees’ conversion rates, web traffic or policies by different state government in India and taxes imposed can cause sudden delays in business transaction which may affect business budgets. A well-defined business plan sets expectation and establishes assumptions to manage the future of the business.
- BUDGET PLANNER
Business plan can be used as a regular review tool during meetings with the management team. It allows more or less like an impromptu review of tasks and accomplishments done when meeting with investors or important clients. During these meetings, having an updated version of business plan can track the progress and well-being of the business. Doing any business involves a certain degree of risk. Business plan acts as a budget planner allowing entrepreneurs to take this risk after considering the cash flow plans. Educated guesses done to calculate the risk may consider factors like sales, costs, expenses, assets that need to be purchased and debts to be paid. Meticulous budgeting of these factors determines the rise and fall of a business.