Traditionally, business plans were written for the sole purpose of obtaining funding. Many founders considered them a waste of valuable time and money, unaware of the immense value. The business plan was handed out to VCs or loan officers, never to be used again. Businesses that did not require much startup capital, or startups which were financed by the founders, often would not even bother preparing the document. However, in reality, a business plan is an essential component in launching a startup and sustaining a successful business.
Planning is crucial in order to improve the odds of establishing a successful entity. An internal business plan can be used to ensure the idea is viable by determining potential expenses, competitors, and profit. In-depth analysis will benefit startups greatly as the research reduces the odds of unexpected hardships. While outlining important goals, objectives, and milestones will lead to better execution.
In addition, an internal business plan allows the founders to clearly define their offering, audience, and overall strategy. Explicitly stating the above, in a document that can (and should) be referenced anytime, will allow all involved parties to better understand the concept. As a result, miscommunication and confusion regarding the core operations will be avoided.
While a business plan is often created for external parties, the document is extremely valuable for internal operations and growth.
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