Is a Business Plan Worth the Time and Effort? 7 Benefits and What to Include in the Plan

Running a business can feel like balancing multiple spinning plates on sticks. Numerous variables have to be considered each day, and struggling in one area can create a ripple effect that impacts other aspects of the company. As one of the key decision-makers for the brand, part of your responsibility is planning for the future.

A business plan is a tool that most companies use for this purpose. At every stage of a company's lifecycle, having a business plan to guide decision-making can make operations run smoothly.

Entrepreneurs at a startup may create a business plan to determine what their goals are and how they will achieve them. A large corporation with a 50-year legacy will use a business plan to keep leadership focused on the future of the organization.

What are the Benefits of Writing a Business Plan?

Not all business plans are created equally. Some organizations may create a one-page summary that does not go into great detail while others will craft a pages-long report on the operations of the brand and its goals.

The question you might have is this; is a business plan worth the time and effort that it takes to create it?

The easy answer is yes, creating a business plan is always worth the amount of work that goes into it, but let's talk about why that is.

1. A Business Plan Forces You to Analyze the Company From Top to Bottom

Perhaps the greatest benefit of a business plan is that it forces you to conduct a deep analysis of the state of the company. If you have aspirations of building or maintaining a successful business, then there must be a clear understanding of how the company operates and where it is going.

The business planning process requires that you look into things like management teams, financial planning, marketing strategy, customer relationships, budget, long-term goals, the state of the market, competition, and other internal factors.

This analysis stage could reveal structural issues or efficiency gaps that must be addressed to build a smooth operation.

2. Business Plans Provide Clarity of Goals

The larger your brand, the more complicated it can be to cast a vision for the future. With more personalities in the room, coming to a consensus may be difficult, and many businesses fail because the leadership structure is not all on the same page.

A business plan helps you develop a clear vision for the future of the company. A large percentage of the plan will be focused on goals, both short-term and long-term. With these goals written down in a formal document, it can become easier to make tough decisions about the company's direction, especially when there are conflicting opinions in the boardroom or managerial team.

A great business plan can serve as a guide for the decision-makers in the organization, putting the company in a better position to take positive steps toward those business milestones.

3. A Business Plan Can Help Secure Funding

Businesses of all sizes often require funding from outside sources to succeed. New brands especially have to deal with startup costs and other barriers to entry that require them to seek out investors.

A well-researched business plan can be the tool you need to convince investors to back the brand. Most potential investors will not even consider funding a company without a business plan, as it demonstrates a lack of planning and even professionalism. These individuals that are interested in investing want to see that you have a clear vision for the future and know what needs to happen to get there.

The perfect business plan could mean the difference between getting investors on board and failing to secure enough funding to grow the brand. If you want actual results with your investor search, then writing a business plan is a must.

4. Drawing in New Employees is Simpler with Business Planning

This benefit may not appear at the top of many lists of the advantages of creating business plans, but it is certainly worth mentioning. Job seekers tend to look for stability in the positions they seek. Many businesses that do not have a clear direction or structure may fail to provide that, causing them to miss out on top talent.

If your company is unified by a written business plan that details the structure, goals, and operations of the brand, then that can present an attractive offer to potential employees.

Companies depend on people for all of their success, so using a business model that is backed up by a solid business plan helps your organization attract top talent that can make the company stronger.

5. The Business Planning Process Confirms Resource Needs

One of the biggest challenges that you may face as a business owner or executive is figuring out the resource needs of the organization. Resources in the business world do not just refer to money, but also time, people, and physical objects.

Though writing a business plan can be a time-consuming activity, it can also help you hone in on the resource needs of the organization, both now and in the future should growth occur. A deep look at the leadership structure could reveal staffing needs, or an analysis of the budget could show that you need more investment than initially thought.

Taking the time to write business plans gives companies more clarity about the resources that they have and what they will need to achieve their goals.

6. Working Through Business Plans Grants a Competitive Advantage

The idea behind business planning is that companies that write business plans have a firm grasp on the state of the organization and where it is going. They also provide a clear roadmap for growth and a tool that streamlines decision-making.

All of these advantages can give a business a leg up on its competitors, particularly if those organizations do not have their own comprehensive business plans.

7. Business Planning Leads to a Higher Rate of Success

Research shows that almost half of all new businesses fail within the first five years. There are many reasons why new companies fail (opens in a new window), but many of them have to do with a lack of business planning.

Perhaps the owners were not aware of the lack of need in the target market because they never took the time to study it. Maybe they were unable to obtain funding because the potential investors they met with were not impressed. Even fast expansion without a clear structural plan could have failed.

Each of these scenarios could have been avoided or addressed if enough time had been spent developing a business plan for the brand. The amount of commitment required to get a foot in the door of an industry essentially demands that intense business planning take place.

What Should Be Included in the Plan?

Deciding whether you need a business plan is a decision that is up to your leadership team, but perhaps a little more convincing is needed. Let's break down some of the most common aspects that should be included in a business plan to give you a clearer picture of how the benefits listed above can be accessed.

Executive Summary

This is the first part of the business plan that people will read. Written business plans often include this feature as a preview of what is to come in the following pages.

Typically, this section is just a breakdown of what the business plan will cover. It may include brief descriptions of the mission statement and the products or services that will be offered. Some experts recommend that this section is written last so that it can accurately summarize the overall plan.

Business Idea/Description

A crucial part of the business plan is the company overview. For entrepreneurs that are just starting with a new brand, this section may be more about the business idea rather than a summary of the business since it does not exist yet.

The business idea section will go into more detail about the brand as a whole, the goals for the future, the products/services, and the target customers. It also includes details about the management team and their backgrounds, such as the amount of experience within the industry. If you are a solopreneur pitching business ideas, you will write about the planned structure and team members that may be needed to conduct efficient business operations.

You could also rename this section as the business concept. New entrepreneurs especially have to focus their business planning on projections based on research, so the description of the organization is more of a concept than a factual report.

Market Analysis

Identifying and defining the target market for a brand is crucial for any hope of success. If you do not understand the customers that would most benefit from what you are selling, then you will have a low chance of gaining a foothold in the industry.

The market analysis involves research into various aspects of this audience. What are their needs and pain points? How will the product or service benefit them? What demographic data and behavioral data are relevant to understand them better?

The market analysis section can also include competitor analysis. Who are the direct and indirect competitors that you will be going up against for a share of the target market? This whole section demonstrates that you have done thorough research on the industry and the customers that you hope to attract.

Marketing Strategy

The planning process has already included insights about the target market, now it is time to discuss how you will engage them. Written business plans that include marketing strategies are considered more comprehensive because it addresses some of the tactics that will help brands reach their goals.

The marketing plan section can go into detail about the various channels that will be utilized, the type of messaging, important trends that will be leveraged, and the overall campaign strategies that will guide communications with customers. For example, will you utilize social media channels, promotional products, direct mail campaigns, or paid ads online? Perhaps a mix of all four of these? This is where business plans can share their marketing collateral intentions.

This part of the business plan should also address sales strategies, such as why customers will prefer your products over those of the competitors. What is the unique selling proposition of your brand? Business planning is a thorough process, and laying out your marketing tactics can help convince financial backers that you have a plan for achieving success.

Product/Service Overview

Businesses exist to sell a product or service to other businesses or consumers. We could be talking about young entrepreneurs or established businesses and the general goal is the same; to sell something and make money.

A detailed description of the current products and services, or a future idea for a new product belongs in this section of the business plan. It is your chance to talk about the features and benefits of what you offer and other factors like the manufacturing process, lifespan, and the cost of production.

The more detailed you get in this area of business planning, the easier it will be for investment firms to feel confident about providing funds to the organization.

Financial Projections

This is where you can seal the deal with potential investors, whether they are massive venture capitalists or private investors that focus on small businesses.

Business planning in general requires a lot of number-crunching and cash flow tracking. Depending on your business model, you have to decide how to allocate the resources available to you and if you need to be raising capital to meet the needs of the business.

This section should include a breakdown of the current business budget, the financial needs of the various departments and initiatives, and the financial projections for cash flow goals that must be met for success. If these calculations reveal that raising capital is necessary, the investors will want to see specific numbers that are being requested.

Internal Operations

How is the business going to operate? Business plans should include some of the structural organization and logistical processes that will be a part of the company's operations.

For example, what technological needs are there to give employees what they need to do their jobs? Is office space needed? What equipment is required for delivering products and services to customers? What sizes are the various department in the organization and how many people will be hired for each?

The operations planning process is a critical piece of the business plan because it provides more context for how the business works. Plus, this level of structural organization can be appealing to executives, employees, and financial backers that have a stake in the business.

Appendices/Supporting Documents

As you are wrapping up the main portion of the business plan, an appendix can be very helpful to provide extra context and details for anyone who will be reading the plan.

Supporting documents can lead to greater understanding while supporting the stated goals and tactics for achieving them. Some examples of supporting documents that could strengthen a business plan include cash flow spreadsheets, marketing research, legal documentation, patents, and advertising materials.

Including these extra pieces in your business plan will further demonstrate the amount of research that has gone into preparing this document. Entrepreneurs will be seen as very thorough and ambitious, while already established businesses can back up their plans for the future.

The Verdict: Is it Worth it?

A business plan helps both new entrepreneurs and corporations that have existed for decades create a focused vision for the future and an accurate reflection of the current state of their brands.

Companies that invest the time and work into crafting business plans tend to gain the most traction with potential financial backers. Clarity of operations and goals can go a long way with private investment firms and venture capital organizations. Brands that invest in business planning also have more unified leadership teams and clearer goals than brands that have not taken the time to focus on business planning.

So do you need a business plan?

Yes!

Even if your brand has seen tremendous growth and you feel that the organization has a firm grasp on its goals, it can hardly hurt to conduct a thorough analysis of the state of the business and build a focused roadmap for the direction it is going. Plus, the more the business grows, the more likely things are going to change with how it runs, making an update to your plan necessary.

If you believe that you don't need a business plan for your new venture, then you are potentially setting yourself up for failure. You may quickly learn that combining all of your research and objectives into one document is a much simpler way to attract talent, funding, and professional interest for the brand.

Getting Started with Business Planning

Maybe you still have a lot of questions about business planning and how it can benefit your organization. Fortunately, there are plenty of tools available to lend you some assistance.

Many business coaches specialize in creating plans for companies to guide them toward success along with their consulting services. Additionally, some entities specialize in providing programs to help companies develop business plans such as Palo Alto Software. When in doubt, you can just Google "how to write business plans" and you will probably gain access to multiple search result pages of information that can make this task easier.

Do not underestimate the power of business plans and how effective they can be at driving companies toward success. Research shows that the most successful companies in the world, and probably in your specific industry, reached those levels because of well-researched business planning.

It all starts by taking the first step. When you get a chance, take some time to write down a summary of your business and its mission. This simple practice can get the ball rolling as you start to get into the logistical operations. Eventually, you can start incorporating market research and your advertising tactics. Once you have touched on all the important aspects of an ideal business plan, you can start to organize the information into sections and include more details for each, relying on various supporting documents to supplement the data.

Before you know it, you will have a pretty solid business plan laid out. Be one of those companies that puts time into planning so that you can provide better services to customers and experience consistent growth.