Wondering why a business plan is so important? For people who are still at the very beginning of their business start-up – whether it’s a small freelance business from home or a new company with an office and an initial pool of employees – a professional business plan can be a decisive success factor. We have put together 21 good reasons in favour of a business plan.
Unternehmenswerk explains what a business plan is for and why it is so important
We at Unternehmenswerk are a professional management consultancy and would like to support you on your path to self-employment or in expanding your start-up. We have put together the following 21 reasons why you need a business plan to achieve your goals.
21 reasons: Why is a business plan important?
It proves that you are serious about your business idea
A formal business plan is necessary to demonstrate to all interested parties – banks, government agencies, employees, investors, partners and yourself – that you are committed to building the business. Creating your plan forces you to find strategies that will drive the growth of your business, rethink existing methods and critically scrutinise structures.
Operational milestones are defined in the business plan
The business plan should set out all the milestones that are important for the long-term success of your company. To paraphrase Guy Kawasaki: A milestone is an event significant enough to tell your spouse about (without boring him or her to death). Would you tell your spouse at home that you revised the company brochure? Probably not. But you would certainly share the news that you’ve launched your new website or reached an annual turnover of 1 million euros.
It helps to better understand the competition
Creating a business plan forces you to analyse the competition. All businesses have competition in the form of direct or indirect competitors and it is crucial to understand the competitive advantages of your business. If you don’t currently have a competitive advantage, this analysis will help you figure out what you need to do to gain it.
Get to know your customers better
Why do they buy when they buy? Why don’t they if they don’t? Thorough customer analysis is essential for an effective business plan and for a successful business. By understanding your customers, you can not only develop better products and services for them, but also reach them more cost-effectively through advertising and targeted communication.
You can evaluate previous assumptions
The process of actually writing the business plan helps to bring previously ‘hidden’ assumptions to the fore. By writing them down and evaluating them, you can analyse them for validity. For example, you may have assumed that local retailers would stock your product. If this scenario has not materialised, you can evaluate these results in your business plan and better assess future risks.
It helps you to better assess the feasibility of your project
How good is this opportunity? The business plan process involves researching your target market and 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 realise the project unchanged. In other cases, the result will deviate from your planning. Sometimes it is even necessary to bury a project and continue with another idea that has a better chance of success.
This is where you document your business model
How exactly will your company earn money? This is an important question that you should answer in writing for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions related to financing your business. When reading your business plan, investors or entrepreneur friends may think of additional sources of income that you should consider.
You can use the business plan to determine your financing requirements
Does your company need to raise capital? If so, how much? One of the purposes of a business plan is to help you determine exactly how much capital you need and what you will use it for. This process is essential for raising start-up capital and effectively utilising your financial resources. Planning ahead also gives you financial certainty for the future.
You can use the plan to attract investors for your project
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? Investors will usually want to meet you in person before they write you a cheque. At these meetings, a business plan is often requested for review.
An up-to-date business plan also secures you long-term financing
In addition to start-up capital, companies often need money during the growth and expansion phase. This is used, for example, to establish better accounting and management systems, introduce new products or services to existing markets or expand the existing business to other markets and customer types. With a constantly updated business plan, you have a much better chance of getting the money you need to continue working or expand. Investors and financiers always pay attention to a borrower’s risk of default. Word of mouth is not enough to convince your lenders of your creditworthiness. Instead, let facts and figures speak for you by presenting a properly formulated business plan.
Planning reduces the risk
Wrong business decisions cost time and money. The process of writing the business plan helps to minimise these opportunity costs. Evaluate and compare the attractiveness of a particular opportunity during the writing process – this can save you from making costly mistakes.
The business plan includes a detailed market analysis of your industry
What are the most important trends in your industry? What are the biggest threats? Is the market growing or shrinking? How big is the target market for your product or service? Creating the business plan will help you gain a broader, deeper and more accurate understanding of your market. It will help you to use this knowledge to make informed decisions that will ensure the success of your business.
In the business plan, you define the direction of your company
The business plan is a roadmap that you can act on and use as a guide in times of doubt. Without a business plan, you may constantly change your short-term strategies and quickly lose sight of your long-term milestones. You would never go on a long road trip without a map – think of the business plan as your map.
You can use the business plan to attract employees to your organisation
To attract and retain top-notch employees and talent, a business plan is necessary. The business plan convinces employees (and management) that your business idea is sound and that the company will achieve its strategic goals. Your employees get a concrete idea of the business concept, which motivates them to work with you. It is important that your employees, and not you, will do most of the work in growing your company. Therefore, let them in on your intentions and long-term plans, harmonise the workforce and strengthen the team spirit.
The basis for attracting business partners
A business plan is also appreciated by potential business partners, as it will show whether a partnership or even a merger with your company is worthwhile. Building partnerships often requires time and capital, and companies will be more willing to partner with you if they have a detailed explanation of your business methods.
It helps you to position your product or service sensibly on the market
Creating a business plan helps to define the role of your company on the market. This definition allows you to succinctly describe the company and position the brand to customers, investors and partners. With the insight into the industry, competition and customers that you gain during the business planning process, you can best determine how to position your brand.
It includes an assessment of your company
A formal business plan allows you to compare the actual operational results of your actual business with the theoretically planned results. This way, you can clearly see whether you have achieved your strategic, financial and operational goals (and why you did or did not).
It prepares you for market changes
Changes in the market can have serious consequences for a company. To make these effects more predictable, it is worth forecasting potential fluctuations in your business plan and developing contingency strategies. If you are already in a crisis, for example because your current sales and operating models no longer work under the difficult economic conditions, you can also revise or even rewrite your business plan. Define and validate strategies that can help you out of the emergency situation.
Your personnel requirements are forecast
Your business plan also provides a roadmap for your staffing requirements. It is not uncommon for companies to realise that they are understaffed after completing their business plan. Such a deficit is not dramatic as long as it is recognised in good time, as it takes time to recruit and train good employees. If you understand your company’s staffing needs and can forecast them well, you can also expand smoothly.
The business plan includes a marketing plan
How will you find, reach and retain your customers? How high is your advertising budget? What price will you charge? A well-documented marketing plan is essential to growing a business. The marketing strategies and tactics you use will evolve each year. Therefore, it is important to revise at least the marketing analysis and marketing planning part of the business plan annually.
Thinking out-of-the-box: The business plan opens up new perspectives
Through brainstorming, whiteboarding or creative impulse questions, you can see your company in a new light. You will come up with new ideas for marketing your product or service and managing your company. Developing and implementing new ideas on a regular basis is the key difference between a company that is merely surviving and one that is thriving. A business plan or a discussion with a professional business consultant therefore not only helps new entrepreneurs to develop a business field, but also keeps an existing company dynamic and up-to-date.
If you want to write your business plan yourself, we recommend that you get in touch with us if you have any questions – we know what is important in a professional business plan and can help you.
Consultancy services are often subsidised by the federal government. If you receive advice from an accredited business consultant like us, you will receive funding for your company. This means you only have a very small personal contribution.
If you need a professional business plan for your (future) company, in most cases you will receive a grant from BAFA, the Federal Office of Economics and Export Control. Please contact us and we will check the funding options for you.

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Unternehmenswerk helps you to create a professional business plan
For a precise analysis and the creation of a professional business plan, a conversation with a business consultant can be helpful. Please contact us and we will see together how we can help you. More information: Have a business plan created.