This is where a business plan comes into action. Think of a business plan as your road map, where you can put all your thoughts on paper so that you have a clear idea of where your business is going.
In doing this business plan, you will be able to check if your idea makes sense, discover any weaknesses in your plans or product, assess any potential risks (e.g. if a third party that you use goes out of business, what will you do?), and identify any business opportunities that you may not have previously considered.
Having a business plan is also important when it comes to convincing other people to back your business – whether that be a bank or an investor. If you are seeking to raise capital using a bank, they are not likely to lend any money unless you present a business plan. Therefore, it is important that your business plan looks professional and contains all the relevant information that said bank or investor would be looking for.
A traditional and more commonly used business plan uses a standard structure. With this type of plan, you are expected to go into detail in each section.
There is also a different type of business plan called a ‘lean startup’. This one is less common, but it still uses a standard structure. In this case, you would only be expected to summarize the most important points of your plan, making it easy to read and understand. This type of plan would typically not include any of the business background and would generally only be laid out across one page. This simplified version not only takes less time to create, but it also allows you the flexibility to adapt and update your plan in the future.