What is the purpose of a business plan?

The main purpose of a business plan is to develop a company’s goals and objectives, vision, and mission and propose a strategy to attain them. Another major importance of a business plan is to guide you in your startup and help you grow it through professional guidance. 

A business plan contains information on how a business will achieve its goals, sources of funds, and how employees will contribute towards its success. A business plan enables an entrepreneur to track progress as the business grows.

Other reasons why you need a business plan are to help your business secure the funding it needs and better decision-making procedures. The importance of business plan writing is also to maximize resource allocation by effectively organizing the resources of your business.  A business plan is written using certain steps. It takes 5-10 days to complete a business plan. If you need a comprehensive business plan, you can hire a professional business plan writer at an affordable price. 

23 purposes of a business plan

A business plan is important for the success of your venture, as it outlines your goals and objectives and provides a strategy to achieve them. A well-written business plan brings clarity to your vision, ensuring good decision-making regarding key aspects like capital investments and business milestones.

A business plan provides a clear definition of your mission, helping to establish realistic and unique goals. The plan also includes a market analysis, which gives insights into consumer behavior and competition, helping in strategic planning. Additionally, a business plan attracts professional guidance and helps in hiring the right employees by clearly outlining their roles and responsibilities.

A business plan minimizes opportunity costs by helping you assess the feasibility of your venture versus other opportunities. Continuous evaluation of your business progress is supported by financial forecasts and performance monitoring. A business plan is a vital tool for attracting investors, guiding business planning, and guaranteeing long-term success through a clear path to achieve your business objectives.

Below is a list of 23 reasons why a business plan is important:

 1.    Offers professional analysis of your business idea

A business plan consultant will evaluate your business idea which involves studying market conditions and target market. Market analysis is a primary component of a business plan and entails assessing market factors such as consumer buying patterns and competition.

 A business plan enables you to establish a financial plan for your business. Evaluating a business idea is also being able to gauge the financial outlook of your business. A business plan will help you plan for future expenses and secure investments.

2.    Gives clear explanation of your vision

A business plan written by a business plan expert helps bring clarity to your vision statement. A business plan details your business’ goals and how you will achieve them by giving a comprehensive picture of your business.

The importance of a business plan is to ensure good decision making regarding key aspects of the business such as capital investments. Hence, a clear vision helps you to identify crucial business priorities and milestones to focus on.

3.    Provides accurate definition of your mission

The main aim of writing a mission statement is to clearly state the purpose of your organization. A mission statement points to the end goal and direction of your business. A well written business plan should have an accurate, realistic and unique mission statement.

Accuracy in a mission statement is to ensure that you only include things that relate to your business. The mission should be realistic hence define attainable purpose and goals. The uniqueness of your mission statement ensures that it stands out from that of your competitors.

4.    Shows clear layout of your business milestone

The milestones of your business are integral to communicate effectively the executability of your business plan by committing to when objectives will be met. Milestones break down your endeavors into small and manageable targets. This is why the milestones sub-section of your business plan executive summary section is of great purpose.

Your business milestone helps you convey past achievements to stakeholders who will probably invest in your business because it appears credible and has a high chance of succeeding. Milestones also explain future goals and how once attained, will result in increased revenue and profits.

5.    Offers proper knowledge of your market

The market analysis section of your business plan is of great importance because it provides evidence that there is a market niche that your business can exploit. A professional business plan writer will do extensive market research so as to update you on the latest trends and changes in your industry.

Market research information will help you identify opportunities or threats that your business may face. In addition, information will give you a solid understanding of your industry, competitors and the overall market hence enabling you to come up with strategies that work best for your business.

6.    Attracts professional guidance in your industry

Investors and lenders look for great teams that can execute your business plan. It is therefore crucial to use your plan to attract the best talent pool of professionals. To be a successful entrepreneur, you will also need to recruit a team of business experts and hence use your business plan as a recruiting tool.

A well written business plan should be easy to read, outline what will be achieved and describe the role that top professionals will play in the success of the business. Professional business experts offer experience and a neutral viewpoint which helps steer a business.

7.    Equips with better knowledge of the competitors

Every business has competition and therefore, competitor analysis is an important aspect of a business plan as it offers priceless insights into the competitive landscape in which your business operates. It is crucial to understand the strengths and weaknesses of your competition to ensure your business grows and survives.

The purpose of a business plan is to come up with a competitive analysis. Take a look at competitors’ objectives and marketing strategies. To gather information, one could visit their location, check out their websites and browse for any material related to them. Competitive analysis serves the purpose of also helping you identify changes you can make to your business strategies.

8.    Gives better understanding of your customers

Customers are the bloodline of every business, without them there would not be any business. A business should have a plan to understand its customers. A well written business plan is important in attracting new customers by providing a guideline on how to acquire and retain them.

Extensive market research must be conducted so that your business plan details a customer retention strategy for example offering great customer service or loyalty programs. Market research should also enable you to identify your target market and explain how they will be reached.

9.    Expresses previous business assumptions

Identifying business assumptions is important for getting real business benefits from your business plan. The key is to be able to distinguish between changed assumptions and the difference between actual and planned performance. You cannot build accountability into the business planning process until you have a list of business assumptions that might change.

The executive summary section of your business plan should be able to clearly and concisely briefly describe the business, its products or service, and the unique opportunity the business is offering. The executive summary should make the reader understand the business concept and why it is a good idea.

 10. Guides in developing a revenue model

The pricing strategy and revenue model sections are of the most importance in a business plan because they outline how a business intends to generate revenue and sustain profitability. Revenue model outlines how your business will generate income in the long term.

While writing a business plan, you should conduct a financial analysis of your business whether a startup or small business and come up with various revenue models. For example, sales revenue, advertising revenue, subscription or free premium revenue models. Sales revenue model relies on selling products to consumers directly while subscription revenue involves offering access to products on a recurring fee.

11. Helps in financial forecasts

Financial forecasts help to predict the necessary cashflow to operate day to day business activities. Financial forecasting is a crucial step when crafting a business plan allows you to expect revenue and expenses of your new business over a specified time period. Your financial partners exhibit a lot of interest on your forecast.

Examples of financial forecasts include: sales forecast used to estimate the turnover of your business. In your financial forecast, you should include three financial statements namely; profit and loss statement, the balance sheet and the cashflow statement.

12. Helps to attract investors

A meticulously created business plan plays an important role in your quest to attract investors to fund your business venture. Your business plan acts as a road map detailing your business concept, strategy and financial projections hence compelling potential investors to recognize the value of your business and commit their capital.

The executive summary acts as a snapshot of your entire business plan. It concisely describes your funding requirement, market opportunity, competitive advantage and business concept. A well-crafted executive summary introduces your business and the problem it solves.

13. Guides in hiring the right employees and management

A business plan outlines the types of employees and professional services that your business needs to grow. A business plan can be used as a tool to monitor the performance of employee development which allows the human resources department and managers to hold employees accountable to their work.

Without the right team, you will not be able to implement the strategies and business goals that your business plan details. Your plan must therefore include the management team of your business, their responsibilities and professional backgrounds. For each new hire, identify the key characteristic and qualification of the candidate.

14. Saves you on wasting time on the wrong opportunity

Business plan writing process helps to minimize opportunity cost. Writing a business plan enables you to assess the attractiveness of your particular business venture versus other opportunities. A business plan helps you foresee potential risks associated with your business hence, the need to research and analyze questions arising.

A business plan involves market research and competitive landscape analysis hence, serves as a feasibility study for the success of your venture. It helps you to answer the question of how good your venture is. Sometimes, you might go with a different venture that may have better chances of success.

15. Guides you on how to prioritize business activities

Evaluating the vision of your business helps you visualize what priorities can help achieve your business purpose. Business priorities are goals that help your team attain daily tasks to help increase your business efficiency. Other examples of business priorities include: customer service improvement, creating a marketing plan and effectively managing employees.

Your business plan should make your priorities measurable to make your goals clear. Clearer goals increase the chances that your business will accomplish them. Make your business priorities comprehensible by employees to increase success of attaining them.

16. Helps to attract partners

Partners need your business plan so as to determine whether it’s worth partnering with your business. Time and money are required to establish partnerships hence, investors will be more inclined to partner with your venture if they read a detailed explanation about your business.

A business plan that answers questions on income generation and profits is attractive to partners. It shows partners that you have done your assignment, have a clear vision and a realistic plan on how to achieve your vision.

17. Guides in brand positioning

A business plan helps define the role of your business in the market enabling you to describe the business and position the brand to customers, partners and investors. Determine how to position your brand using the insights gained during the competitive analysis you conducted during the business planning process.

Effective branding sets your business apart from competitors by highlighting what makes the business unique and valuable to customers. The results of brand positioning strategies are: building customer loyalty, trust and building brand recognition.

18. Assisting in documenting marketing plan

A marketing plan in a business plan, describes all important business aspects like its goals, mission statement, budget and strategies. The purpose of a marketing plan is to write down strategies in an organized way to help you keep track and measure the success of your marketing campaigns.

The marketing section of a business plan explains how your business will reach the target market and acquire new customers. Details on promotional activities the business will take are also included as well as the sales tactics and distribution channels.

19. Gives proper definition of products that you sell

When writing the products section of your business plan, describe what your business is offering in simple terms to avoid being too technical.  This is to ensure that your business plan reader understands your product description. Explain how the product works and how it benefits customers.

You should also describe what makes your product unique or better than those already in the market. Include also the price of the product, how you will sell it and your distribution strategy. You should also indicate whether you intend to expand your product in the future as your business expands.

20. Provides an excellent explanation of services that you offer

Your service description describes your value proposition to customers and explains the features, characteristics, and benefits of the service in a convincing way so that a customer can make a purchase. Keep the service description simple and comprehensible. Explain how the service you are offering solves the customer’s problem.

Include how your service will be priced in comparison with what your competitors offer. Share with your customers how your business is best suited to sell the service by showcasing your expertise in the industry. Your expertise can be shown through testimonials, endorsements or awards that you have received as recognition of your best service.

21. Helps in continuous evaluation of your business progress

Continuous evaluation of your business progress is important to enable you to gather feedback and learn from past experiences. You will be able to note areas of improvement and ensure optimal results. A business plan allows you to compare actual results versus those in the plan itself. You will see if you have achieved your financial, operational and strategic goals or not.

Ensure that you have a business continuity plan which is system of prevention and recovery from potential threats to your business. In the event of a disaster, the business continuity plan ensures that your assets are protected and your staff can quickly function thereafter.

22. Helps in the assessment of the feasibility of your business idea

Feasibility assessment of your business idea entails gathering and analyzing information to find out if the idea is good or not. The first step is to clearly define your idea in terms of how it is different from existing solutions and what value it offers. The next step is to conduct market research so as to understand the size, trends, growth preference and behavior of your potential customers.

The third step is to do a technical feasibility of your business idea whose purpose is to evaluate if your business can acquire the requisite resources, skills, knowledge and technology to craft and deliver your product. You will then conduct a financial feasibility to project potential revenue, expenses and cashflow of your business.

23. Guides in the identification of new business ideas

Coming up with new ideas for running your business and executing them ensures that it survives and thrives. Business plan writing involves processes like whiteboarding and brainstorming which causes you to see your business in a different light. As a result, you are likely to come up with new ideas about your business.

For example, coming up with new marketing ideas for your products or service. A business plan helps you identify deliberate and clear next steps for your business. It can help you see gaps in your business before they become problems.

How do you write a business plan that benefits your business?

Writing a business plan is a 12-steps process that benefits from following specific guidelines. Key tips include keeping the content concise, setting achievable goals, conducting thorough research, and considering your target audience. 

An outstanding business plan clearly outlines your objectives, offerings, and financial projections. It also includes the strategies you plan to apply to achieve your business objectives. 

The structure of a business plan involves several key components: beginning with an executive summary, followed by a company description. It also requires conducting a market analysis, detailing the management structure, cataloging products and services, segmenting customers, devising a marketing strategy, and outlining operational procedures.

How long does it take to write a business plan?

Business plan writing is usually a time-consuming process. Writing a business plan takes 5-10 days depending on your urgency. Several factors come to play when it comes to the time taken. Key among them is budget. Ensure you identify the cost of each activity for planning purposes.

Can you buy a business plan?

Yes, you can buy a business plan service. Many online platforms offer access to skilled writers, experienced experts, and dedicated freelancers who specialize in writing comprehensive business plans.

These services are designed to provide you with a customized business plan that meets your specific needs, whether you are a startup, small business, seeking funding, or planning to expand an existing business. 

When you hire professional services, you benefit from the advice of seasoned experts who bring a wealth of knowledge in market analysis, financial projections, and strategic planning. 

By hiring professional writers from a company, you ensure that your business plan is not only thoroughly researched but also persuasively written, increasing your chances of appealing to your investors or stakeholders.

Choosing the right service will give you access to a team that understands your industry and can deliver a high-quality business plan.

Is a business plan affordable?

Yes. A business plan is affordable. A professional business plan costs between $2000 and $25000 depending on the quality of your required plan, its complexity and the length of the plan. There are also private consultants who charge business plan writing on an hourly basis whose fees could range between $50 to $ 300.

Several companies offer business plan writing services but the quality of their work may vary hence its important to choose who writes your plan carefully. When it comes to business plan writing services, you get what you pay for. If you work with a cheap business plan writer, you face the risk of ending up with a low-quality plan.