When starting a small or home-based business, it’s easy to tell yourself that you are too simple or too small to need a business plan. If that’s you, you are not alone. Washington State University conducted a study showing that a full 27% of small businesses have never had a business plan.
The fact is, however, that it’s just as important for your small business to have a plan as it is for the mega-box-retailer down the street. In fact, the study showed that 64% of businesses with a business plan subsequently grew their business, where only 43% of those without a business plan could say the same.
The reasons are many, but having a business plan is key if you are looking for investors, applying for a loan or making improvements to your existing business. In fact, anyone looking to have a financial interest in your business (such as your banker) will want to know that you have a plan to take your business in the right direction. Owners with a business plan receive funding at twice the rate of owners without a plan (36% vs 18%) according to the study.
Even if you don’t expect to seek financing for your business, it’s still good to have a plan in place. A business plan provides you with a clear vision of your purpose and goals, and can help remind you what you envisioned for your company.
Creating a business plan isn’t difficult, but there are a few key pieces of information you’ll want to include to make your business plan effective.