According to a journal published in the Applied Economic Letters, entrepreneurs who create a business plan receive higher growth in sales and higher gross revenues than those who don’t.

So, what is a business plan? Well, a business plan is an important document that possesses:

• A company/business’s primary objectives
• The techniques or methods to be used for the achievement of those objectives, and
• The time duration required for achieving them.
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5 Reasons Why Every Entrepreneur Needs a Business Plan

Just like every architect requires a blueprint to make sure every visual detail of their building is executed to perfection, every successful entrepreneur needs a thorough business plan before diving headfirst into starting a business.

Here are 5 reasons why you should seriously consider creating a business plan:

1.    Turning Vision into Reality

Business ideas may sound excellent in theory but may prove completely impractical when implemented. Every entrepreneur possesses the passion for making their business dreams come true; however, passion is not always enough to make a business successful.

An average of 25% of startups with no business plans fail in their first two years. This means a business plan ensures that:

• the idea you’ve set out to achieve holds certain value and can be executed thoughtfully
• gives you the stamp of approval for your business, and
• validates your entrepreneurial ideas.

2.    Driving Better Communication

Once you’ve started your business, your employees need to know their roles clearly.  A business plan helps employees know of key aims and objectives your company strives to achieve. Hence, creating a business plan will foster better communication between you and your employees, as they consult it to make difficult decisions and develop a long-term understanding of the company’s most important goals and vision.

With 71% of fast-growing companies possessing a business plan, there’s no doubt that performance and efficiency are bound to improve if you create one before starting a business.

3.    Attracting Investors

Every business needs financing. This can either come from your pocket or an investor’s. If it’s the latter, you will need a thorough business plan detailing everything about your business and its objectives to attract potential investors.

A business plan can convince an investor by:

• Outlining your market research, by informing about competitors and target market
• Proving the practicality of your business and what it aims to achieve
• Detailing financial projections for the next five years

By having a comprehensive business plan, the odds of attaining funding from investors increase by 2.5%. Therefore, having a solid business plan should be a top priority.

4.    Anticipating Problems

Business plans offer you a realistic way of making things possible by taking your idea and turning it into a functional business. Through a business plan, you can think pragmatically and take practical steps as you start your business.

Being pragmatic means learning about the hurdles or challenges you will face. Hence, a business plan can help you anticipate potential problems with your business before you dive into action and meet them.

5.    Sourcing Better Advice

Before starting a business, many entrepreneurs consult friends, family, or other business experts to determine whether their business idea is worth the effort. This advice can sometimes be a make or break for a business.

When people have more information about your business expectations, goals, and needed resources, they can think more clearly. With a detailed business plan in hand, the people you choose to consult with can advise you much better.

Create A Business Plan With An Expert

Now that you have a solid understanding of the importance of a business plan, you better start drafting one. Here’s a short video to help you out.

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