If you’re just starting a new business, you have probably wondered whether or not you really need a formal business plan. The short answer is, yes. A formal business plan is one of the most commonly overlooked aspects of successful business ownership — but it’s one of the most integral.
Many business owners mistakenly believe that business plans are only for those seeking funding for their venture. While a business plan can certainly help you to secure financing, that isn’t its sole value. The reality is, whether you have the capital you need or not, there are myriad benefits to having a formal business plan that will contribute to your company’s long-term success, including:
Even if you’ve been operating your business successfully without one, it’s never too late to create and implement a formal business plan. Many business owners cite time as a reason for their lack of a plan, and while developing a complete business plan will take time, it will certainly be time well spent.
Plan for success
Some statistics state that as many as 50 percent of all U.S. companies fail within five years. With that in mind, it’s smart to give yourself every advantage you can — starting with proper planning out of the gate.
A 2017 survey found that having a business plan doubles a company’s chances of success. Of 995 business owners who said they’d completed a business plan, 499 — or 64 percent — said they had grown their business. Additionally, 297, or 36 percent of those owners, had secured a loan and 280, or 36 percent, said they’d secured investment capital.
Let’s take a look at some benefits beyond those listed above of devising a formal business plan.
Overall, developing a formal business plan will give you greater insight into a variety of factors affecting your business, which you may not have otherwise considered. Once you’ve developed your formal business plan, you should review and update it regularly. Doing so will help to keep your goals top of mind, assess what’s working and what isn’t, and identify new opportunities that come your way.
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