This is my second post in the Business Planning series. You can read the first post here.

Why Do You Need To Plan?
There are different reasons why people write business plans. There are a lot of people that get into business without any basic form of planning, while for some, it is absolutely critical to do some planning.

Simply speaking, most people/businesses write a business plan because they want to have a document to use as a guide in their business processes, or more importantly, because they want to raise money or take on partners.

Writing a business plan is one way of tracking your success, or failure and/or being accountable for your actions. Most business plans, if written properly will highlight that the business will be a failure even before any risk is taken. I see this all the time. On the other hand, some business plans will highlight the risks, but will reveal that the rewards could be even greater if success is achieved.

If you need people to partner with you in your venture, for whatever reason, such as need for expertise, finance or access to resources such as technology, then you will need to demonstrate that your venture has got some stamina.

Let’s look at it from the financial side of things, as that is the most commonly needed external resource.

If you’re putting together a business plan to raise funding for your venture, the plan becomes even more critical in determining the success or failure of your business.

Your business plan will most likely become your only selling document, and will determine if you get the nod or get thrown out of the building.

It’s your business/venture. It will be exciting to you. You should be passionate about it, and you will probably know all the intimate details.

However, when you write a business plan, you should think about your audience, and the information and guarantee that they will need before they commit to parting with their cash.

Your business plan should be presented in a professional manner, where any claims about markets, sales/revenue potential and expenditure are verifiable. Don’t use Jargons that the general public won’t understand.

Remember, your bank manager, business angel or venture capitalist will all be perusing your business plan in great detail before they decide to risk putting their money into your business/venture.

The audience is important. Your bank manager will be keen to see if your business will be able to repay the loan. This is where cash flow statements and projected business growth becomes important.

An investor, whether it is a business angel or a venture capitalist, will want to see the growth potential and the likelihood of very decent returns on their investments.

Bank managers are more concerned with loan repayments, while investors are more focused on their exit route. Investors will either sell their stake in your business for a profit, or earn dividends (a share of the profits).

So, the reason why you need a business plan is to show the various potential stakeholders how their risk taking could potentially payoff if they decide to invest in your business.

Now, if you are thinking that you really don’t need a business plan because all you are doing is developing a website or an eBusiness, THINK AGAIN!

Your business plan as an eBusiness owner needs to be more robust and concrete than the normal bricks and mortar business plan. Why? The average bank manager or investor does not understand the ins and outs of the Internet marketing/online business world.