What is a Business Plan and Why Do You Need It?

A lot of entrepreneurs tend to skip the business plan process or don’t give it the care and attention it deserves. Some people think that a single one-pager with the proud name of their business frontlining the cover page and a few dotted lines filled with buzzwords is enough to get started.

By definition, a business plan is a planning document structured to lay out the key foundations and transform a business concept into an actionable roadmap. It helps you organize, evaluate, and plan key aspects of a business before execution.

The truth is, many founders can start a business and wing it along the way, but a business plan acts like a homing beacon for when things seem out of control or confusing. Clarity is one of the most underrated aspects of a business, and a business plan lays it all out in front of you.

According to Businessdasher, 71% of fast-growing companies have business plans and have a chance to grow by 30%. Additionally, 30% of businesses with a business plan have secured investment capital, compared to 12% without one.

Here are the top 5 reasons why you should be among the percentages of business owners who can ideate, implement, and scale with a business plan.

Turning Words into Actions

Everyone likes a cool business idea, but turning that idea into a practical, sustainable, and profitable business is a different challenge altogether. A well-crafted business plan can help you navigate through the challenges, competitors , and plenty of other hurdles you may face when turning an idea into an action plan.

It’s good to stay focused, consistent, and grounded in your idea. A business plan takes you from “wishful thinking” to a structured roadmap that helps you understand how the business will actually work.

Is your business serving the right target audience? Can you do everything online, or do you need a physical brick-and-mortar location? Can you do everything on your own, or will you need to assemble a team?

There is no doubt that you will have more questions as you go along, and the business planning process can help you explore and answer many of them.

Keeps You on Track

Step 1: create a business plan. Step 2: stick to it!

Of course, there are going to be many variations, versions, and changes to your plans as the business grows and develops, but a business plan acts as your Northern Star and keeps you focused on the end goal.

According to a study by Businessdasher, 90% of organizations fail to execute their strategic plans successfully, and much of that is attributed to drifting away from the mission and vision.

Sure, there might be new trends and developments in the market, technology, or among competitors, and the business would likely need to adjust over time, but that shouldn’t mean you should drift away from the vision. Many businesses struggle not because they fail to adapt, but because they abandon the foundations that made the business viable in the first place.

A business plan is more than a funding document. It can serve as a roadmap for execution, communication, growth, and long-term decision-making.

Eagle-Eye View From the Top

Part of writing a business plan is asking yourself many questions and finding answers. Sometimes a single question can make you rewrite an entire business plan or even scrap it altogether. Essentially, a business plan acts like a vantage point, allowing you to get an eagle-eye view of any possible shortcomings or opportunities in your business.

Business planning will help you think through important decisions before investing significant time, money, and resources.

While you remain consistent in crafting and refining your business plan, it’s also important to know where your business is heading. How do you plan on scaling? Do you foresee new products and services that can bolster your business? What about expanding to new regions, territories, or markets?

Taking a step back and looking at the bigger picture can help you identify risks, opportunities, and important decisions before they become costly mistakes.

Having that eagle-eye view of your business will help you identify opportunities, anticipate challenges, and make more informed decisions as the business grows.

Present Your Business with Confidence

Now that you have completed your business plan, you’re ready to pitch it. While the business plan itself may be shared with lenders, investors, partners, or advisors, it also serves as the foundation for creating more concise presentations and pitch materials.

A business plan is the foundation for creating a clear, concise, and confident pitch deck that you can share with relevant stakeholders.

A stakeholder can be anyone who has actual stakes in this business from investors, lenders, partners, advisors, or consultants. Basically, anyone who is involved in this business will need to see a proper and structured layout of your business, rather than a verbal pitch.

What started out as “Hey, you know what the world needs?” will turn into “Here is how we tackled said problem, and I have the solution right here.”

Pitch your idea to trusted advisors, mentors, industry professionals, or individuals who can provide constructive feedback. Invite questions and let them challenge your concept. Don’t feel discouraged if they point out something that requires you to go back to the drawing board. Take the time to address any problems or challenges they bring up, and if you don’t have an answer for them, then revert back to the drawing board.

When you’re ready for investors or lenders, you’ll have a confident and clear business plan and pitch deck that are ready for funding. Not only will it help you be more prepared, but it will also increase the likelihood of getting funded.

You Can Always Revert Back to It

Founders are eager to get started, and once a business plan is complete, they are ready to launch. However, that doesn’t mean you should stow it away in the depths of your cabinet. Another purpose of the business plan is to actively revisit the document that lays out your entire vision and methodology. In year two, you might feel like you’ve plateaued and need some clarity. Revisiting your business plan can help you regain clarity, reassess your goals, and make more informed decisions as the business evolves.

In some cases, you may be considering a new service, product, expansion, or direction for the business and aren’t sure where to begin. It’s always a good idea to review your business plan in case you’re feeling lost or stuck.

Final Thoughts

Turning ideas into actionable deliverables is the goal of every founder, and clarity is often the only thing standing in the way. If you are considering launching a business, it’s important to

understand that you need to learn how to walk before you can run. A business plan is like a personal coach that tracks your macros and movements before you’re ready to run the marathon.

Beyond that, a business plan will help you:

• Evaluate assumptions – No guessing games. Everything you don’t know, you lay it out in front of you with data and roadmaps to navigate or mitigate any hurdles.

• Understand costs and requirements – A general idea of how much your business will cost is only permissible when you’re in the “Hey, I’ve got a cool idea” phase. But with pen on paper, a business plan will enable you to dive deep into all the mechanisms and moving parts to fund and run your business.

• Assess viability and longevity – An idea may sound good. And even the business plan itself may seem flawless. But there isn’t any business out there thinking of just the problem without considering a long-term solution. If it can solve the problem, great. If you’re skilled and want to turn your craft into a business, also great. But consider if your services or products can have a long shelf-life. A business plan will answer that for you.

In many cases, opening a business is not a sprint to the top, so treating your business plan with the utmost care is a necessary step toward moving in the right direction.

At Fledged Solutions, we offer the Fledged Business Plan for founders looking to build a clear roadmap for their business, and the Flight Deck for those looking to go beyond planning and develop the strategies behind – helping you launch with confidence.

• Business Idea vs Business Concept: What’s the Difference?
• From Idea to Launch: Understanding the Journey of Launching a Business
• What is a Business Plan and Why Do You Need It?