[? Music ?] [Treehouse presents]

[Quick Tips] [Why Do I Need a Business Plan? with Pasan Premaratne]

Hi, I'm Pasan.

In this Treehouse Quick Tip, we're going to discuss a question

that everyone asks.

Why do I need a business plan?

There are a lot of varying responses out there with most people

saying you don't need to have one unless you're applying for a loan

or financing your company in some way.

I disagree.

Writing a business plan has way more uses than that.

For one, when you get to writing your business plan,

you will really understand whether your idea is feasible or not.

Writing a business plan forces you to think about your ideas in detail.

Rather than having them float around in your head,

putting them down on paper allows you to map your company's future,

giving it structure and direction.

Once you're done with your business plan,

you will have a much better idea if the business will work,

and more importantly, if you want to undertake it.

For example, you could have an exciting idea

that seems like it would be really fun to work on,

but further research conducted when writing a business plan

reveals that there is an intense amount of government regulation

in this industry, which means tons of red tape and paperwork for you.

Do you still want to start the business?

Business plans can be written at any stage in the company's life cycle,

whether it's on day 1 or a year in.

Regardless of the timing, it should have the following basic structure.

Your business plan should define your product or service

and the market you will compete in.

It will also identify your management team,

where the business will operate, and your experience in the industry.

The plan should include a marketing study,

promotional strategies, any current and/or projected balance sheets,

income statements, and cash flow analysis.

You should outline if you will be obtaining financial support,

and if so, when, how, and what method of repayment you will use.

And finally, provide any operational information

along with details on where the business is now,

where it has been, and where you see it going.

Basically, cover every aspect of your business.

Hopefully by now you understand what I meant when I said

that writing a plan will make you really understand your business completely.

To summarize, why do you need a business plan?

For feasibility studies for you,

for anyone else to understand the business,

and to secure loans and outside capital.

Like individuals have resumes, your business has its business plan.

You will know your business so thoroughly that you can convince anyone

of its potential and infuse your enthusiasm

and energy into any employee or potential investor.

By providing a business plan, people will know

without a doubt that you have done your research.