Why? Because once you know the details of your business inside and out, you will be better prepared to write your executive summary. After all, this section is a summary of everything else you`re going to write about.
Without a business plan as a baseline, it will be far more difficult to track your progress, make adjustments, and have historical information readily available to reference when making difficult decisions. Creating a business plan ensures that you have a roadmap that doesn`t just outline where you plan to go, but where you`ve already been.
The more you test and review elements of your plan, the better your plan and business will be. This can save you from spending days developing a strategy that just isn`t feasible.
All business plans should establish strategy, tactics, milestones, tasks, assumptions, and essential numbers (projected sales, direct costs, expenses, and cash flow). All business plans should develop accountability and tracking.
Moreover, business plans provide both a literal and proverbial roadmap to reach the personal and financial goals one has set out to achieve. Before writing your business plan, it`s best to spend a few days collecting information and creating financial estimates. Most of that time is spent explaining difficult questions and assumptions.
The most common mistake by far is on profits. Startups that grow don`t produce profits. Investors make money on valuation increases, not profits. Real businesses rarely produce more than single-digit profits. Big profit projections are sophomoric. Take all those profits and dump them into marketing expenses and you`ll be better off.