While there are famous stories of businesses that have become highly successful with a fly-by-the-night approach, a huge majority of businesses that operate without a business plan are doomed to fail. Just like you cannot start a journey without a charted path and a destination, so will a business not find success without a business plan?

In simple terms, a business plan is the coherent thoughts about the business put on paper. It answers very crucial questions related to the planned venture:

• What needs to be done?
• Who will be responsible for doing it?
• When will it happen?
• Where will it be done?
• Why does it need to be done?
• How will it be done?

A business plan has several elements that help your investors and other interested parties. The crucial elements are:

• Executive summary – This is the whole concept in brief
• Company description – What is the venture about, who is behind it and what new does it bring to the market?
• Market research– Why does the entrepreneur think that the venture presents a good value to the market? Here is where the SWOT analysis happens to show how the venture fares against the competition.
• Description of the product/services – What is the business bringing to the market? How different is it from what is already in the market?
• Management/ operations – How is the venture to run? What business model will be used and what operations will be in place for efficient delivery of the product or service?
• Marketing and sales strategy – How will be the product/service be presented to the market? This involves branding, packaging, and pricing.
• Financials – This section goes into the nitty-gritty of the venture on the ability to generate revenue, break even and return a profit. The financials validate the venture.

Why does a start-up need a business plan?

• Does it make sense – Putting the idea on paper will help assess the viability of the idea. What might seems to be a good idea would have to be re-assessed if bringing out sections like the market research is difficult.
• Fundraising – It is easier to explain the concept while it is on paper. Potential investors want to go through it carefully and see if what is being pitched makes sense. A business plan can be disseminated to remote investors as well.
• Reference point – There are many events that happen in the early stages of a start-up. A business acts as a guiding beacon. Reviewing the business plan at different intervals helps determine if the venture is still on course.

The truth is that every start-up needs a business plan. It is beneficial for the founder, investors and other interested parties, as a foundation of the venture.