Why is a business plan necessary?
Let’s look at a vivid example of what can happen without adequate planning and research before a business is launched.
A group of three successful business men noticed a major trend in the United States — the population is aging. Thus, they decided to build a nursing and rehabilitation center. Good idea, right? Well, let’s take a closer look. They built a very nice three-floor care center with 20 rooms on each floor. There are two elevators on each floor to help the residents get down to the dining room three times per day. Sound good? Unfortunately, it’s been a disaster. What happened? Think for a second. What do you think the big problem has been?
Most residents of nursing homes are in wheelchairs. They often have very serious health problems and poor memories. They get lost easy and they find it very difficult to get on and off elevators. So how do you think the occupancy has been in this three-story care center? Take a guess, and you’ll probably be right. The first floor is full with a waiting list, but the second and third floors have been almost entirely empty. These three men have lost a lot of money on this venture. If they had written a detailed business plan and done their research, they would not have made such a costly mistake.
A business plan is absolutely necessary — no ifs, ands, or buts. These are some of the purposes of a business plan:
- To specifically state what needs to be done to start the business
- To give you a better idea if your business idea will actually work
- To help raise money for starting the business
- To provide structure for operations and management
- To develop strategies for successfully competing in the marketplace
Click the race car to continue
©2007 Business Professionals of America. All rights reserved