Why startups need business plans

June 4, 2019

Great ideas often inspire people to start a business. But ideas alone don’t make a business. Startup founders will likely need to develop a business plan to get their ideas off the ground and begin operations.

Many startup founders require some measure of outside funding to turn their ideas into businesses, and that’s where banks and venture capital firms come into the equation. Banks and venture capitalists often require prospective startups to provide business plans before they will consider funding them. Business plans must include various things, including detailed descriptions of the business and the products or services the business intends to offer.

An effective business plan also indicates how the business will achieve its goals and should include financial projections for the business. A market analysis indicating how those projections were reached should be included, as should a strategy to market the business so its financial goals will be achieved.

Even startup owners who don’t intend to seek funding from venture capitalists or lending institutions should develop a detailed business plan, which can serve as a guidebook that keeps on track toward achieving their goals.

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