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Writing a business plan has many uses. You will really understand if your idea is feasible, and forces you to think about your company's future in detail. You'll have a much better idea if your business will work, and if you really want to move forward and actually start the business.
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[? Music ?] [Treehouse presents]
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[Quick Tips] [Why Do I Need a Business Plan? with Pasan Premaratne]
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Hi, I'm Pasan.
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In this Treehouse Quick Tip, we're going to discuss a question
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that everyone asks.
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Why do I need a business plan?
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There are a lot of varying responses out there with most people
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saying you don't need to have one unless you're applying for a loan
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or financing your company in some way.
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I disagree.
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Writing a business plan has way more uses than that.
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For one, when you get to writing your business plan,
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you will really understand whether your idea is feasible or not.
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Writing a business plan forces you to think about your ideas in detail.
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Rather than having them float around in your head,
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putting them down on paper allows you to map your company's future,
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giving it structure and direction.
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Once you're done with your business plan,
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you will have a much better idea if the business will work,
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and more importantly, if you want to undertake it.
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For example, you could have an exciting idea
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that seems like it would be really fun to work on,
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but further research conducted when writing a business plan
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reveals that there is an intense amount of government regulation
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in this industry, which means tons of red tape and paperwork for you.
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Do you still want to start the business?
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Business plans can be written at any stage in the company's life cycle,
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whether it's on day 1 or a year in.
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Regardless of the timing, it should have the following basic structure.
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Your business plan should define your product or service
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and the market you will compete in.
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It will also identify your management team,
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where the business will operate, and your experience in the industry.
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The plan should include a marketing study,
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promotional strategies, any current and/or projected balance sheets,
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income statements, and cash flow analysis.
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You should outline if you will be obtaining financial support,
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and if so, when, how, and what method of repayment you will use.
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And finally, provide any operational information
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along with details on where the business is now,
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where it has been, and where you see it going.
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Basically, cover every aspect of your business.
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Hopefully by now you understand what I meant when I said
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that writing a plan will make you really understand your business completely.
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To summarize, why do you need a business plan?
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For feasibility studies for you,
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for anyone else to understand the business,
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and to secure loans and outside capital.
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Like individuals have resumes, your business has its business plan.
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You will know your business so thoroughly that you can convince anyone
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of its potential and infuse your enthusiasm
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and energy into any employee or potential investor.
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By providing a business plan, people will know
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without a doubt that you have done your research.
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