Join our Waitlist for Expert Advice!

Why You Need a Business Plan Think of it as a road map for your business future.

By Stever Robbins

Opinions expressed by Entrepreneur contributors are their own.

Q: I'm starting a small business and am getting all the funding I need from friends and relatives. Is there any reason to write a business plan?

A: It sounds as if you're thinking of a business plan as just a fund-raising tool. In fact, a business plan is much more than that: It's a tool for understanding how your business is put together. You can use it to monitor progress, hold yourself accountable and control the business's fate. And of course, it's a sales and recruiting tool for courting key employees or future investors.

Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan. You'll end up spotting connections you otherwise would have missed. For example, if your marketing plan projects 10,000 customers by year two and your staffing plan provides for two salespeople, that forces you to ask: How can two salespeople generate 10,000 customers? The answer might lead you to conclude that forming partnerships, targeting distributors and concentrating on bulk sales to large companies would be your best tactics.

As part of your operational plan, you'll lay out major marketing and operational milestones. When you're the founder, the only person holding you accountable to those results on a daily basis is you. So your plan becomes a baseline for monitoring your progress. If your prototype was to be complete by February 1, and it gets done early-on January 10, for example-you can ask yourself why. Was there an unexpected breakthrough? Did someone put in a heroic effort? Or did you just overestimate? What you learn will help you do an even better job next time.

But even more than a tool for after-the-fact learning, a plan is how you drive the future. When you write, "We expect 100 customers by the end of year one," it's not a passive prediction-you don't just wait for the customers to show up. It becomes your sales force's goal. The plan lays out targets in all major areas: sales, expense items, hiring positions and financing goals. Once laid out, the targets become performance goals.

And of course, a well-written plan is great for attracting talent. When a prospect asks to understand your business, you can hand them a plan that gives them an entire overview. Their reactions tell you something about how quickly and thoroughly they can think through your business's key issues. Plus, the written record of your goals coupled with a track record of delivering against those goals sends a message loud and clear: You understand your business and can deliver the results you promise. Great employees will respond to that message-as will banks and investors the next time you need to raise money.

So viewing your plan as a fund-raising tool is just the beginning of the story. You'll use the plan for so much more-for managing yourself, for operating the business and for recruiting. Before deciding to skip your planning phase, consider all the implications and what they mean for your future success.

Stever Robbins is a venture coach, helping entrepreneurs and early-stage companies develop the attitudes, skills and capabilities needed to succeed. He brings to bear skills as an entrepreneur, teacher and technologist in helping others create successful ventures.


The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.

Stever Robbins is a venture coach, helping entrepreneurs and early-stage companies develop the attitudes, skills and capabilities needed to succeed. He brings to bear skills as an entrepreneur, teacher and technologist in helping others create successful ventures.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

These College Classmates Started a Side Hustle to Solve a Common Household Problem — Then Scaled It From $0 to Over $50 Million in Under 4 Years

Tumble co-founders Justin Soleimani and Zach Dannett envisioned a better, easier-to-handle kind of rug — so they got to work on it.

Business Solutions

Upgrade Your ChatGPT and Automation Skill Set

With this e-degree, you'll learn how to enhance productivity with automation and AI tools.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business Solutions

We Put ChatGPT's Biggest Competitor to the Test

Could this be the AI that revolutionizes the way you work?

Business News

You Have 2 Months to Prepare Your Business for AI Agents. Here's Why!

Get Ready: AI Agents Are Transforming the Workforce Faster Than You Think