My grandfather used to take me on car rides when I was young. We'd jump in the car and he's start driving. One of the things we used to say to each other on these rides was: "we don't know where we're going, but we're on our way". This may be great for grandfather/grandson bonding, but it isn't the best plan when starting and running a business.
If you fail to plan, you plan to fail.
This well-known business motivational axiom is particularly true for small businesspeople who fail to work through and create a business plan for their company.
Business plans force you to think out, research, and put in writing every function and aspect of your business, including:
- Sales and Marketing
- Products and Services
- Finance, Accounting, Taxes, and Budgets
- Operations and Human Resources
The greatest advantage to creating a business plan is that it forces you to critically analyze your business (or prospective business). Through this process, you will be able to identify your company’s strengths and weaknesses as well as the opportunities and threats you will be facing. This is often referred to as SWOT Analysis in business (Strengths, Weaknesses, Opportunities, and Threats).
No one I know who has worked through the process of creating a business plan has regretted doing it.