A business plan is a tool for describing your business top to bottom and inside out. Think of it as a strategic blueprint that illustrates where you want your business to be in three to five years and how you expect to get there. Writing a business plan forces you to think through your value proposition, personnel, marketing assumptions, operations, and financial projections. It’s particularly important for startups and companies wanting to progress to the next level of operations.
A business plan is essential for raising capital. Venture capitalists, commercial banks, government-backed lenders and most angel investors require a comprehensive plan so they can understand the risks of your business venture and get a feel for its viability. But a business plan may be even more important as an effective tool for managing yourself and keeping your business on track to meet its goals. It can also be used as a recruiting tool for key employees.
According to Clemson University entrepreneurship professor William B. Gartner, a person who takes the time to write a business plan is two and a half times more likely to actually start their business than someone who passes on writing a plan.