When Do You Need To Develop A Business Plan?
When Do You Need To Develop A Business Plan? Photo by Dylan Gillis on Unsplash

As obvious as this may seem, not everyone thinks that writing a business plan is necessary. But the truth is that it's entirely necessary! Most businesses start as an idea, but what sets apart an idea from a viable business venture right from the start is a business plan. But when should you start developing this plan?

Start Sooner Rather Than Later

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Generally speaking, you should start writing a business plan as soon as you're ready to pursue your dream -- but don't think you have to jump into it right away. You can sit on the idea for a while before you start drafting a document. Follow these rules for an effective timeline.

  • Start your business plan before you hire anyone.
  • After you've decided to open a business, complete your plan within the year. Three months is usually a reasonable amount of time to spend on it once you've started.
  • If you're already talking to potential customers or finalizing your product, it's time to get writing.
  • Once you have the basics planned out, start digging deeper. This is probably the best way to decide if it's time to start. Ask yourself, do you have goals or milestones? Do you have basic expenses and profits planned out? Do you have an idea of your market? Do you know where you're going to get your funding?

Best practice: a business plan shouldn't be written and submitted the day before you go for a business loan, but you shouldn't wait too long either. It needs to be drafted, edited, rewritten, and so on, but you also need to keep up the momentum.

Listen to Your Needs

Some people don't follow a timeline, and that works perfectly for them. Instead, they listen to their needs to tell them when is the best time to start.

When You Need To Attract Investors

When you need a capital injection and are considering an investor as the solution, start writing that business plan! You won't sell an investor to a dream or an idea if it's just in your head, no matter how promising it sounds. A business plan will show an investor that you're serious about it, and you know the market in which you're entering.

When You Need to Work Out Ideas

The great part about a business plan is that it helps you get to know your business better. Within a business plan are different sections where you outline aspects of your idea. Because writing a business plan is an ongoing process, you can start it when you need to brainstorm.

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Marketing Plan

An entrepreneur who wants to market their business will need to map out a marketing strategy. In your plan, spell out the different ways that the company will position itself against the competition. It should capture the various stages of advertising, from market penetration to social media disruption.

Understand the Market

When you need to understand the market you're entering, you might as well put that research and your conclusions directly into your business plan. A business plan contains a section where an entrepreneur must fill in their market analysis and competitor analysis. The market and competitor analysis will cover these areas:

  • What does the product or business aim to bring into the market that the competitor is not doing already?
  • How is this product going to position itself against the existing competition?
  • What do you hope to fulfil what the competition is not doing?

These sections will help the entrepreneur make an informed decision on whether they have thoroughly thought out the product or you need more time.

Product Pricing

When you need to outline your basic numbers, head straight to the product pricing section. Be prepared to answer the following questions:

  • Has the price covered all the costs of production to promise a profit?
  • Have you considered competitor pricing, cost of sales and marketing, projected changes in demand and supply before settling on the price?
  • Is the price only set to counter competition, or is it set to encourage sales? It would help if you considered both of these factors.
  • What market factors will affect the price of the products in the foreseeable future?

Numbers are, in essence, the real world. By putting effort into the numbers, you show anyone who reads your plan that you know what you're talking about.

Distribution Channels

When you've almost finished your product and need to figure out distribution channels, pick up that pen! What is the distribution channel that will work best for the product that you are selling? You'll answer these questions in the business plan, right down to the specific retail outlets you target before it gets to the final consumer.

Conclusion

A business plan is a document that is extremely vital to the launch of any business, and there are no two ways to go about writing it. But the most important thing to remember is not to procrastinate! You should develop your business plan when you're ready, but don't wait too long. Before you know it, it'll be a year later, and you've made zero progress. You'll thank yourself for getting it done promptly.