1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

(/) 

20 Reasons Why You Need a Business Plan in 2023

 Written by Dave Lavinsky(https://www.growthink.com/content/author/dave)

If you’d like to quickly and easily complete your business plan, download
Growthink’s Ultimate Business Plan Template
(https://businessplantemplate.growthink.com/plan/?utm_source=20-reasons-
why-you-need-business-plan&utm_medium=NA&utm_campaign=seo) and
complete your business plan and financial model in hours.

What is the purpose of a business plan and why are business plans so important? Below are
our top 20 reasons why you need a business plan.

1. To prove that you’re serious about your business. A formal business plan is necessary to
show all interested parties — employees, investors, partners and yourself — that you are

https://www.growthink.com/content/20-reasons-why-you-need-business-plan 1/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

committed to building the business. Creating your plan forces you to think through and
select the strategies that will propel your growth.
(/) 
2. To establish business milestones. The business plan should clearly lay out the long-term
milestones that are most important to the success of your business. To paraphrase Guy
Kawasaki, a milestone is something significant enough to come home and tell your spouse
about (without boring him or her to death). Would you tell your spouse that you tweaked the
company brochure? Probably not. But you’d certainly share the news that you launched your
new website or reached $1M in annual revenues.

3. To better understand your competition. Creating the business plan forces you to analyze
the competition. All companies have competition in the form of either direct or indirect
competitors, and it is critical to understand your company’s competitive advantages. And if
you don’t currently have competitive advantages, to figure out what you must do to gain
them.

4. To better understand your customer. Why do they buy when they buy? Why don’t they
when they don’t? An in-depth customer analysis is essential to an effective business plan and
to a successful business. Understanding your customers will not only allow you to create
better products and services for them, but will allow you to more cost-effectively reach them
via advertising and promotions.

5. To enunciate previously unstated assumptions. The process of actually writing the

business plan helps to bring previously “hidden” assumptions to the foreground. By writing
them down and assessing them, you can test them and analyze their validity. For example,
you might have assumed that local retailers would carry your product; in your business plan,
you could assess the results of the scenario in which this didn’t occur.

6. To assess the feasibility of your venture. How good is this opportunity? The business
plan process (/businessplan/help-center/business-planning-process-5-steps-creating-new-
plan) involves researching your target market, as well as the competitive landscape, and
serves as a feasibility study for the success of your venture. In some cases, the result of your
planning will be to table the venture. And it might be to go forward with a different venture
that may have a better chance of success.

https://www.growthink.com/content/20-reasons-why-you-need-business-plan 2/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

7. To document your revenue model. How exactly will your business make money? This is a
critical question to answer in writing, for yourself and your investors. Documenting the
(/) 
revenue model helps to address challenges and assumptions associated with the model. And
upon reading your plan, others may suggest additional revenue streams to consider.

8. To determine your financial needs. Does your business need to raise capital? How much?
One of the purposes of a business plan is to help you to determine exactly how much capital
you need and what you will use it for. This process is essential for raising capital for business
and for effectively employing the capital. It will also enable you to plan ahead, particularly if
you need to raise additional funding in the future.

If you’d like to quickly and easily complete your business plan, download
Growthink’s Ultimate Business Plan Template
(https://businessplantemplate.growthink.com/plan/?utm_source=20-reasons-
why-you-need-business-plan&utm_medium=NA&utm_campaign=seo) and
complete your business plan and financial model in hours.

9. To attract investors. A formal business plan is the basis for financing proposals. The
business plan answers investors’ questions such as: Is there a need for this product/service?
What are the financial projections? What is the company’s exit strategy? While investors will
generally want to meet you in person before writing you a check, in nearly all cases, they will
also thoroughly review your business plan.

10. To reduce the risk of pursuing the wrong opportunity. The process of creating the
business plan helps to minimize opportunity costs. Writing the business plan helps you assess
the attractiveness of this particular opportunity, versus other opportunities. So you make the
best decisions.

11. To force you to research and really know your market. What are the most important
trends in your industry? What are the greatest threats to your industry? Is the market growing
or shrinking? What is the size of the target market for your product/service? Creating the
business plan will help you to gain a wider, deeper, and more nuanced understanding of your
marketplace. And it will allow you to use this knowledge to make decisions to improve your
company’s success.
https://www.growthink.com/content/20-reasons-why-you-need-business-plan 3/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

12. To attract employees and a management team. To attract and retain top quality talent,
a business plan is necessary. The business plan inspires employees and management that the
(/) 
idea is sound and that the business is poised to achieve its strategic goals. Importantly, as
you grow your company, your employees and not you will do most of the work. So getting
them aligned and motivated will be key to your success.

13. To plot your course and focus your efforts. The business plan provides a roadmap
from which to operate, and to look to for direction in times of doubt. Without a business
plan, you may shift your short-term strategies constantly without a view to your long-term
milestones. You wouldn’t go on a long driving trip without a map; think of your business plan
as your map.

14. To attract partners. Partners also want to see a business plan, in order to determine
whether it is worth partnering with your business. Establishing partnerships often requires
time and capital, and companies will be more likely to partner with your venture if they can
read a detailed explanation of your company.

15. To position your brand. Creating the business plan helps to define your company’s role
in the marketplace. This definition allows you to succinctly describe the business and position
the brand to customers, investors, and partners. With the industry, customer and competitive
insight you gain during the business planning process, you can best determine how to
position your brand.

16. To judge the success of your business. A formal business plan allows you to compare
actual operational results versus the business plan itself. In this way, it allows you to clearly
see whether you have achieved your strategic, financing, and operational goals (and why you
have or have not).

17. To reposition your business to deal with changing conditions. For example, during
difficult economic conditions, if your current sales and operational models aren’t working,
you can rewrite your business plan to define, try, and validate new ideas and strategies.

18. To document your marketing plan (/marketing-plan). How are you going to reach
your customers? How will you retain them? What is your advertising budget? What price will
you charge? A well-documented marketing plan is essential to the growth of a business. And

https://www.growthink.com/content/20-reasons-why-you-need-business-plan 4/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

the marketing strategies and tactics you use will evolve each year, so revisiting your
marketing plan at least annually is critical.
(/) 
19. To understand and forecast your company’s staffing needs. After completing your
business plan, you will not be surprised when you are suddenly short-handed. Rather, your
business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother
expansion. Importantly your plan can not only help you understand your staffing needs, but
ensure your timing is right as it takes time to recruit and train great employees.

20. To uncover new opportunities. Through the process of brainstorming, white-boarding

and creative interviewing, you will likely see your business in a different light. As a result, you
will often come up with new ideas for marketing your product/service and running your
business. It’s coming up with these ideas and executing on them which is often the difference
between a business that fails or just survives and one that thrives.

RELATED VIDEO: How to Write a Business Plan + Free Template

(https://www.youtube.com/watch?v=UVEfE8Uh5ys)

If you’d like to quickly and easily complete your business plan, download
Growthink’s Ultimate Business Plan Template
(https://businessplantemplate.growthink.com/plan/?utm_source=20-reasons-
why-you-need-business-plan&utm_medium=NA&utm_campaign=seo) and
complete your business plan and financial model in hours.

Business Plan FAQs

https://www.growthink.com/content/20-reasons-why-you-need-business-plan 5/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

 What is a Business Plan?

(/) 
 What is the Purpose of a Business Plan?

 Why Do You Need a Business Plan?

 What is the Importance of a Business Plan?

 Why is a Business Plan Important to an Entrepreneur?

About Growthink

Since 1999, Growthink’s business plan experts have assisted more than 4,000 clients in
launching and growing their businesses, and raising more than $2.5 billion in growth
financing.

Need help with your business plan? 

Speak with a professional business plan consultant (/business-plan) from our team.

Use our simple business plan template (/products/business-plan-template).

Check out our business plan examples (/businessplan/help-center/business-plan-

examples).

Or, if you’re creating your own PPM, you can save time and money with Growthink’s
private placement memorandum template (https://special.growthink.com/private-
placement-memorandum-template/).

Learn more about us via our Growthink Business Plan Review page
(https://www.growthink.com/reviews)

https://www.growthink.com/content/20-reasons-why-you-need-business-plan 6/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

The World’s #1 Business Plan (/) 

Template
Would you like to know the quickest and easiest way to create a winning business
plan?

And how to use it to raise funding, improve your strategy, or both?

Well, we’ve developed the ultimate business plan template to help you do this.
Simply click below to learn more.

(https://businessplantemplate.growthink.com/plan/?utm_source=20-reasons-why-
you-need-business-plan&utm_medium=NA&utm_campaign=seo)
Click here to access Growthink’s Ultimate Business Plan Template to finish
your business plan and start growing your company today.
(https://businessplantemplate.growthink.com/plan/?utm_source=20-reasons-
why-you-need-business-plan&utm_medium=NA&utm_campaign=seo)

Other Helpful Business Plan Articles &

Templates

https://www.growthink.com/content/20-reasons-why-you-need-business-plan 7/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

Business Plan Template & How to Write a Great The Perfect Business Plan
Guide for Small Businesses Business Plan (/how-to-write- Outline for a Great Plan
(/products/business-plan- a-business-plan)
(/) (/businessplan/help-
template) center/business-plan-layout-

how-design-your-plan)

Use This Business Plan Business Plan Examples Finding a Business Plan
Format to Expertly Write Your (/businessplan/help- Consultant (/business-plan)
Plan (/businessplan/help- center/business-plan-
center/business-plan-format- examples)
how-structure-your-
business-plan)

How to Write a Business Plan 10 Key Components of a Growthink’s Expert Business

Executive Summary Business Plan Plan Writer
(/businessplan/help- (/businessplan/help- (/businessplan/help-
center/business-plan- center/key-components- center/business-plan-writer-
executive-summary-tips- business-plan-part-ii) when-and-when-not-hire-
killer-executive-summary) one)

How to Create a One Page How to Write the Business Business Plan Software
Business Plan with Template Plan Management Team Options (/business-plan-
Section (/businessplan/help- software)
https://www.growthink.com/content/20-reasons-why-you-need-business-plan 8/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

(/one-page-business-plan- center/business-plan-
template) writing-presenting-
management-team)
(/) 

Popular Posts
Business Plan Presentation How Long Should a Business Growthink Reviews (/reviews)
BusinessMistakes to Avoid
Plan Template Plan Be? (/businessplan/help-
& Guide (/products/business-plan-template)
(/businessplan/help- center/ideal-length-your-
How tocenter/business-plan-
Write a Business Plan for Raising Venture Capital (/content/how-write-business-plan-
business-plan)
raising-venture-capital)
presentation-mistakes-avoid)

20 Reasons Why You Need a Business Plan (/content/20-reasons-why-you-need-business-plan)

Like 251 people like this. Sign Up to see what your friends like.
Business Plan Help Center (/businessplan/help-center)

How to Write a Business Plan (/how-to-write-a-business-plan)

Business Plan Examples (/businessplan/help-center/business-plan-examples)

Our Business Plan Outline (/businessplan/help-center/business-plan-layout-how-design-your-plan)

Business Plan Format Tips (/businessplan/help-center/business-plan-format-how-structure-your-

business-plan)

Components of a Business Plan (/businessplan/help-center/key-components-business-plan-part-ii)

Recent Posts
2022 Venture Growth Funding Report
(https://www.growthink.com/content/2022-venture-growth-funding-
report)
Read More » (https://www.growthink.com/content/2022-venture-growth-funding-report)

(https://www.growthink.com/content/2022-
venture-growth-
funding-report)
https://www.growthink.com/content/20-reasons-why-you-need-business-plan 9/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

20 Reasons Why You Need a Business Plan in 2023

(https://www.growthink.com/content/20-reasons-why-you-need-
business-plan) (/) 
Read More » (https://www.growthink.com/content/20-reasons-why-you-need-business-plan)

(https://www.growthink.com/content/20-
reasons-why-you-
need-business-
plan)

November 2022 Venture Growth Funding Recap

(https://www.growthink.com/content/november-2022-venture-growth-
funding)
Read More » (https://www.growthink.com/content/november-2022-venture-growth-funding)

(https://www.growthink.com/content/november-
2022-venture-
growth-funding)

Follow Us

Growthink
15K likes

Like Page

Follow @Growthink

Blog Categories​
Business Planning (https://www.growthink.com/content/category/business-planning)
Entrepreneurship (https://www.growthink.com/content/category/entrepreneurship)
Financing (https://www.growthink.com/content/category/financing)
General Business (https://www.growthink.com/content/category/business)
Leadership (https://www.growthink.com/content/category/leadership)
https://www.growthink.com/content/20-reasons-why-you-need-business-plan 10/11
1/18/23, 3:57 PM 20 Reasons Why You Need a Business Plan in 2023 | Growthink

Marketing (https://www.growthink.com/content/category/marketing)
Operations (https://www.growthink.com/content/category/operations)
Transaction Strategy (https://www.growthink.com/content/category/transaction-strategy)
(/) 

Company (/about-us)

Site Map (/sitemap)

(htt
ps:/ (htt
(htt
Contact
ps:/ (htt (/contact)
/ww ps:/
w.li /ww
/ww ps:/
nke w.y
w.fa /twi din. out
ceb tter.
ook. co com  ube.
/co co
co m/g mp m/u
m/g row
any ser/
row thin
/gr gro
thin k) owt wthi
k)
hink nk)
Search... ) 

Copyright © Growthink Inc., 2023 | Privacy Policy (/privacy-policy)

https://www.growthink.com/content/20-reasons-why-you-need-business-plan 11/11