While there is nothing to say that a startup can’t become a success without a business plan (and doubtless, plenty have), unless they are incredibly lucky and have significant financial backing, their road to success will likely be far longer and bumpier than if they had formulated a clear and well-thought through business plan.
In fact, planning is key for all businesses, no matter what stage of the entrepreneurial journey they’re at, and a startup that has composed a solid plan and sought guidance from a CPA in Surrey right from the get-go, will find that planning comes more naturally to them as they progress and expand.
But why is a business plan so very important, and in what ways could a business fail by not having one in place?
1. Your business vision will be unclear
Being able to articulate your vision for the startup you’ve created, is made so much simpler with a business plan in place. Making you contemplate every aspect of your new venture in detail, including your goals and steps you’ll take to reach them, the clarity of a business plan can help you communicate better with potential partners, investors and employees, by giving them a clearer picture of your vision.
2. You won’t be able to define your goals and objectives
Setting clear goals that can be measured for a new business, is one of the main purposes of formulating a business plan. Whether you aim to hit certain revenue targets, gain a certain amount of customers, or open branches in new locations, outlining and defining those goals in a business plan, helps you understand exactly what it means for your business to be successful.
3. You won’t understand the market
It’s impossible to put together any kind of business plan without having carried out some market research first, and this will help you better understand the market you’re targeting, along with your competitors and any trends currently within the industry. Without this type of research, you’ll struggle to make informed decisions for the betterment of your startup.
4. Your strategy may not be well-informed
Even if you’re a complete novice to the world of business, you’ll need to put together strategies that enable you to meet your goals. But without a business plan, not only might your goals be poorly defined (or even non-existent), but you’ll struggle to create marketing plans, operational procedures, financial strategies and sales tactics, all of which are crucial for the success of a business. Having your strategies officially documented, will ensure that everyone involved knows exactly what they need to do in order to move the business forward.
5. You’ll find it hard to effectively allocate resources
How you allocate time, money and labour, is of great importance, and a business plan can help you clearly see those areas in which resources should be funnelled to set your business on a path towards growth.
6. You may fail to attract investors or secure funding
Few loaning institutions, or seasoned investors, will touch a request for funding from a startup that hasn’t presented them with a business plan. Potential lenders and investors will want to see your vision, goals, and strategies for achieving them, set out clearly before they can assess your request.
To help make sense of your finances in the early stages of your entrepreneurial journey, consult with a tax accountant in Surrey BC; this will help ensure that your vision is realistic and your goals are achievable. It’s also important to remember that the above list is by no means exhaustive, and that a robust business plan is essential for all startups, and can be instrumental in determining whether a new venture, sinks or swims.
