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15 Reasons Why You Need a Business Plan in 2023

Posted january 21, 2022 by noah parsons.

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As a small business owner or aspiring entrepreneur, a business plan can seem more like a hurdle you have to overcome than a useful tool. It’s a barrier that’s keeping you from moving forward with your business. Maybe the bank won’t review your loan application without a business plan or a potential investor has asked to see your business plan before they will meet with you. 

But, writing a business plan doesn’t have to feel like a homework assignment. Instead, think of writing a business plan as an investment in your business. It’s a tool to figure out a strong and financially viable strategy for growth. And, it’s even been scientifically proven that planning will increase your chances of success and help you grow faster. 

Still not convinced? Read on for our definitive list of reasons why you should write a plan for your business.

What is the key purpose of a business plan? 

Imagine you’re setting out on a journey. You know what your final destination is, but you haven’t figured out how to get there. While it might be fun to just start driving and figure things out as you go, your trip will most likely take longer than you anticipated and cost you more. If you instead take a look at a map and chart the best way to get to your destination, you’ll arrive on time and on budget. Planning for your business isn’t that much different. 

The primary purpose of a business plan is to help you figure out where you want to go with your business and how you’re going to get there. It helps you set your direction and determine a winning strategy. A solid business plan will set your business up for success and help you build an unbeatable company.

If you start off without a plan, you may go down some interesting detours, but you’re unlikely to grow quickly or stick to your budget.

Why do you need to write a business plan?

Establishing a strategic roadmap for your business is the primary benefit of writing a business plan. But what does that really look like for you and your business? Here are our top 15 reasons why you should write a business plan.

1. Reduce your risk

Writing a business plan takes some of the risk out of starting a business. It ensures that you’re thinking through every facet of your business to determine if it can truly be viable. 

Does your solution fit the market? Are your startup or operational costs manageable? Will your proposed business model actually generate sales? What sort of milestones would you need to hit to achieve profitability? These are all questions associated with business risk that you can answer with your plan.

For those already running a business, writing a plan can help you better manage ongoing risk. Should you bring on a new employee? What does cash flow look like for your next month, quarter, or even year? Are you on track to meet your milestones or do you need to change your focus? Keep your plan up to date, review it regularly and you can easily answer these questions and mitigate risk.

2. Uncover your business’s potential

Writing a business plan helps you think about the customers you are serving and what their needs are. Exploring those customer needs will help you uncover new opportunities for your business to serve them and potentially expose new products and services that you could offer. When you use your business plan to manage your business, you’ll be able to see the parts of your strategy that are working and those that aren’t. For example, you may have invested in new marketing efforts to sell one of your products, but that strategy just isn’t working out. With a business plan in hand, you’ll be able to see what’s going to plan and where you need to make adjustments to your strategy, pivoting to new opportunities that will drive profitability.

3. Test a new business idea

When you have a new business idea, it really helps to spend a little time thinking through all the details. A business plan will help you think about your target market, your budget, how much money you’ll need to launch, and how your idea will actually work before you spend any real money. A business plan will also help you easily share your idea with other people to get input and feedback before you get started. 

We recommend using a one-page business plan to test ideas quickly and easily. 

4. Attract investors and get funding to start and grow your business

Sharing your business idea with investors requires a business plan. Now, you probably won’t share a long, detailed business plan to get investors interested, but you probably will share your executive summary — which is an overview of your business plan. Investors may never actually ask for your full business plan, but they will certainly ask you questions that you’ll only be able to answer if you’ve taken the time to write a plan. 

At the very least, they’ll want to see your financial forecasts , so you should be prepared for this. If you end up pitching your business to investors, whether in-person or remotely , having a business plan written makes it much easier to translate the right information into a pitch deck. In short, you’ll have all of the right information ready and available to show why your business is worth investing in.

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5. Plan for different scenarios

Even if you have a plan in place, things rarely actually go to plan. The world is always changing, customer tastes change, and new competitors arrive on the scene. Having a plan allows you to experiment with different scenarios to see how changes to your business will impact your forecasts, budgets, profitability, and cash flow. 

6. Research shows that business plans definitely work

A Journal of Management Studies study found that businesses that take the time to plan grow 30% faster than those that don’t. Our own 2021 small business research study found that 58% of small business owners that have or are working on a plan feel confident in their business, even amidst a crisis. And a study in Small Business Economics found that entrepreneurs that write business plans for their ideas are 152% more likely to actually start their businesses. There’s plenty of additional research that links planning with success, so it’s a proven fact that you won’t be wasting your time when you write your plan.

7. Build a better budget and a financial forecast

A core component of any business plan is a financial forecast. When you take the time to plan, you’ll have to think through your expense budget, your sales goals, and the cash that it’s going to take to keep your doors open, purchase inventory, and more. 

The beauty of incorporating forecasts into your business plan is that you don’t need to have the exact numbers to start. You can work with general assumptions and compare against competitive benchmarks to set a baseline for your business. As you operate and collect financial data you can then begin to update your forecasts to generate a more accurate view of how your business will operate.

8. Determine your financial needs

Without a business plan, it’s impossible to really know how much money it’s going to take to start and run your business. You don’t just need money for your initial purchases. You need to have enough cash in the bank to keep your business afloat while you get fully up and running. A plan will help you determine exactly how much money you’ll need and help you keep track of your cash flow and runway .

9. Attract employees

Especially if you’re a young startup company, attracting employees can be hard. Without a proven track record, why should someone take a risk to work for you? Having a business plan can help solve that problem. Your plan can help a prospective employee understand your business strategy and plans for growth so that they can feel confident joining your team. It’s also incredibly useful in determining when and if it’s feasible for you to bring on more employees . 

10. Get your team all on the same page

A great strategy for your business can only be successful if your team understands it. By documenting your strategy with a business plan, you can easily get everyone on the same page, working towards the same goals. It’s even better if you regularly review your plan with members of your team. This ensures that everyone is consistently going back to the core strategy documentation, analyzing it, and exploring how it impacts individual and team goals .

11. Manage your business better 

A business plan is all about setting goals for your company — both financial goals and milestones you hope to accomplish. When you use your plan to regularly check in on your business to see how you’re doing and what your progress is, you’re managing your business. Regular review , ideally monthly, will help you build a strong, resilient business.

12. Understand your market and build a marketing plan

No matter how good your idea is, you have to figure out who your ideal customers are and how you’re going to get the word out to them. That’s where a marketing plan comes in. It can be an indispensable tool for figuring out how you get your first customers as well as your thousandth customer. 

13. It’s easier than you think

You may be procrastinating in writing a business plan because it sounds like a lot of work. The truth is that planning is much less complicated than you think. Start small with a one-page business plan that you complete in half an hour . From there, refine your plan until your idea is solid. At that point, you can invest a little more time in a more detailed business plan. Just start with the basics and expand from there.

14. You’ll sleep better at night

When you have a plan for your business, you have peace of mind. You know that you’ve invested the time to figure out a business model that actually works and you’ve considered different financial scenarios so you can handle the unexpected. And, you’ve got a management tool to run your business better than your competitors. 

15. Effectively navigate a crisis

Having a business plan not only helps you create a roadmap for your business but also helps you navigate unforeseen events. Large-scale economic downturns, supply shortages, payment delays, cash flow problems, and any number of other issues are bound to pop up. But, you can be prepared to face each crisis head-on by leveraging your business plan.

A plan helps you assess your current situation, determine how the crisis will alter your plan, and begin to explore what it will take to recover. With a little planning, you can even prepare your business for future downturns with this same process. It’ll make crisis planning easier and ideally recession-proof your business by having the right plan and processes in place.

Don’t wait, start writing your business plan today

There are plenty of reasons to write a business plan, but the real reason is about finding success for you and your business. Taking the time to plan is an investment in yourself and your business that will pay dividends, whether you’re starting a new business or taking your existing business to the next level. 

You can jump-start your business plan writing process with our article covering how to write a business plan in as little as 30-minutes .

If you’re looking for a tool to help you get more from your business plan, we recommend trying out LivePlan . Our business planning and management tool will guide you through the entire process, including all of your financial forecasts, without ever requiring that you open a spreadsheet.

Noah Parsons

Noah Parsons

Posted in business plan writing.

6 Reasons You Really Need to Write A Business Plan

Flori Needle

Published: October 14, 2020

Starting a busine ss can be a daunting task, especially if you’re starting from square one.

marketer writing a business plan

It’s easy to feel stuck in the whirlwind of things you’ll need to do, like registering your company, building a team, advertising, the list goes on. Not to mention, a business idea with no foundation can make the process seem incredibly intimidating.

Thankfully, business plans are an antidote for the new business woes that many entrepreneurs feel. Some may shy away from the idea, as they are lengthy documents that require a significant amount of attention and care.

However, there’s a reason why those who take the time to write out a business plan are 16% more likely to be successful than those who don’t. In other words, business plans work.

→ Download Now: Free Business Plan Template

What is a business plan, and why does it matter?

In brief, a business plan is a roadmap to success. It's a blueprint for entrepreneurs to follow that helps them outline, understand, and cohesively achieve their goals.

Writing a business plan involves defining critical aspects of your business, like brand messaging, conducting market research, and creating pricing strategies — all before starting the company.

A business plan can also increase your confidence. You’ll get a holistic view of your idea and understand whether it's worth pursuing.

So, why not take the time to create a blueprint that will make your job easier? Let’s take a look at six reasons why you should write a business plan before doing anything else.

Six Reasons You Really Need To Write a Business Plan

1. Legitimize your business idea.

Pursuing business ideas that stem from passions you’ve had for years can be exciting, but that doesn’t necessarily mean it’s a sound venture.

One of the first things a business plan requires you to do is research your target market. You’ll gain a nuanced understanding of industry trends and what your competitors have done, or not, to succeed. You may find that the idea you have when you start is not likely to be successful.

That may feel disheartening, but you can always modify your original idea to better fit market needs. The more you understand about the industry, your future competitors, and your prospective customers, the greater the likelihood of success. If you identify issues early on, you can develop strategies to deal with them rather than troubleshooting as they happen.

It’s better to know sooner rather than later if your business will be successful before investing time and money.

2. Give your business a foundation for success.

Let's say you’re looking to start a clean beauty company. There are thousands of directions you can go in, so just saying, “I’m starting a clean beauty company!” isn’t enough.

You need to know what specific products you want to make, and why you’re deciding to create them. The Pricing and Product Line style="color: #33475b;"> section of a business plan requires you to identify these elements, making it easier to plan for other components of your business strategy.

You’ll also use your initial market research to outline financial projections, goals, objectives, and operational needs. Identifying these factors ahead of time creates a strong foundation, as you’ll be making critical business decisions early on.

You can refer back to the goals you’ve set within your business plan to track your progress over time and prioritize areas that need extra attention.

All in all, every section of your business plan requires you to go in-depth into your future business strategy before even acting on any of those plans. Having a plan at the ready gives your business a solid foundation for growth.

When you start your company, and your product reaches the market, you’ll spend less time troubleshooting and more time focusing on your target audiences and generating revenue.

3. Obtain funding and investments.

Every new business needs capital to get off the ground. Although it would be nice, banks won’t finance loans just because you request one. They want to know what the money is for, where it’s going, and if you’ll eventually be able to pay it back.

If you want investors to be part of your financing plan, they’ll have questions about your business’ pricing strategies and revenue models. Investors can also back out if they feel like their money isn’t put to fair use. They’ll want something to refer back to track your progress over time and understand if you’re meeting the goals you told them you’d meet. They want to know if their investment was worthwhile.

The Financial Considerations section of a business plan will prompt you to estimate costs ahead of time and establish revenue objectives before applying for loans or speaking to investors.

You’ll secure and finalize your strategy in advance to avoid showing up unprepared for meetings with potential investors.

4. Hire the right people.

After you’ve completed your business plan and you have a clear view of your strategies, goals, and financial needs, there may be milestones you need to meet that require skills you don’t yet have. You may need to hire new people to fill in the gaps.

Having a strategic plan to share with prospective partners and employees can prove that they aren’t signing on to a sinking ship.

If your plans are summarized and feasible, they’ll understand why you want them on your team, and why they should agree to work with you.

5. Communicate your needs.

If you don’t understand how your business will run, it’ll be hard to communicate your business’s legitimacy to all involved parties.

Your plan will give you a well-rounded view of how your business will work, and make it easier for you to communicate this to others.

You may have already secured financing from banks and made deals with investors, but a business’ needs are always changing. While your business grows, you’ll likely need more financial support, more partners, or just expand your services and product offers. Using your business plan as a measure of how you’ve met your goals can make it easier to bring people onto your team at all stages of the process.

6. It makes it easier to sell your business.

A buyer won’t want to purchase a business that will run into the ground after signing the papers. They want a successful, established company.

A business plan that details milestones you can prove you’ve already met can be used to show prospective buyers how you’ve generated success within your market. You can use your accomplishments to negotiate higher price points aligned with your business’ value.

A Business Plan Is Essential

Ultimately, having a business plan can increase your confidence in your new venture. You’ll understand what your business needs to succeed, and outline the tactics you’ll use to achieve those goals.

Some people have a lifetime goal of turning their passions into successful business ventures, and a well-crafted business plan can make those dreams come true.

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why do we need to have a business plan

Business Insights

Harvard Business School Online's Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills.

Why Is Strategic Planning Important?

Above view of team creating a strategic plan

Do you know what your organization’s strategy is? How much time do you dedicate to developing that strategy each month?

If your answers are on the low side, you’re not alone. According to research from Bridges Business Consultancy , 48 percent of leaders spend less than one day per month discussing strategy.

It’s no wonder, then, that 48 percent of all organizations fail to meet at least half of their strategic targets. Before an organization can reap the rewards of its business strategy, planning must take place to ensure its strategy remains agile and executable .

Here’s a look at what strategic planning is and how it can benefit your organization.

Access your free e-book today.

What Is Strategic Planning?

Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees on the organization’s goals, and ensure those goals are backed by data and sound reasoning.

It’s important to highlight that strategic planning is an ongoing process—not a one-time meeting. In the online course Disruptive Strategy , Harvard Business School Professor Clayton Christensen notes that in a study of HBS graduates who started businesses, 93 percent of those with successful strategies evolved and pivoted away from their original strategic plans.

“Most people think of strategy as an event, but that’s not the way the world works,” Christensen says. “When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that’s at work 24/7 in almost every industry.”

Strategic planning requires time, effort, and continual reassessment. Given the proper attention, it can set your business on the right track. Here are three benefits of strategic planning.

Related: 4 Ways to Develop Your Strategic Thinking Skills

Benefits of Strategic Planning

1. create one, forward-focused vision.

Strategy touches every employee and serves as an actionable way to reach your company’s goals.

One significant benefit of strategic planning is that it creates a single, forward-focused vision that can align your company and its shareholders. By making everyone aware of your company’s goals, how and why those goals were chosen, and what they can do to help reach them, you can create an increased sense of responsibility throughout your organization.

This can also have trickle-down effects. For instance, if a manager isn’t clear on your organization’s strategy or the reasoning used to craft it, they could make decisions on a team level that counteract its efforts. With one vision to unite around, everyone at your organization can act with a broader strategy in mind.

2. Draw Attention to Biases and Flaws in Reasoning

The decisions you make come with inherent bias. Taking part in the strategic planning process forces you to examine and explain why you’re making each decision and back it up with data, projections, or case studies, thus combatting your cognitive biases.

A few examples of cognitive biases are:

One cognitive bias that may be more difficult to catch in the act is confirmation bias . When seeking to validate a particular viewpoint, it's the tendency to only pay attention to information that supports that viewpoint.

If you’re crafting a strategic plan for your organization and know which strategy you prefer, enlist others with differing views and opinions to help look for information that either proves or disproves the idea.

Combating biases in strategic decision-making requires effort and dedication from your entire team, and it can make your organization’s strategy that much stronger.

Related: 3 Group Decision-Making Techniques for Success

3. Track Progress Based on Strategic Goals

Having a strategic plan in place can enable you to track progress toward goals. When each department and team understands your company’s larger strategy, their progress can directly impact its success, creating a top-down approach to tracking key performance indicators (KPIs) .

By planning your company’s strategy and defining its goals, KPIs can be determined at the organizational level. These goals can then be extended to business units, departments, teams, and individuals. This ensures that every level of your organization is aligned and can positively impact your business’s KPIs and performance.

It’s important to remember that even though your strategy might be far-reaching and structured, it must remain agile. As Christensen asserts in Disruptive Strategy , a business’s strategy needs to evolve with the challenges and opportunities it encounters. Be prepared to pivot your KPIs as goals shift and communicate the reasons for change to your organization.

Which HBS Online Strategy Course is Right for You? Download Your Free Flowchart

Improve Your Strategic Planning Skills

Strategic planning can benefit your organization’s vision, execution, and progress toward goals. If strategic planning is a skill you’d like to improve, online courses can provide the knowledge and techniques needed to lead your team and organization.

Strategy courses can range from primers on key concepts (such as Economics for Managers ), to deep-dives on strategy frameworks (such as Disruptive Strategy ), to coursework designed to help you strategize for a specific organizational goal (such as Sustainable Business Strategy ).

Learning how to craft an effective, compelling strategic plan can enable you to not only invest in your career but provide lasting value to your organization.

Do you want to formulate winning strategies for your organization? Explore our portfolio of online strategy courses and download the free flowchart to determine which is the best fit for you and your goals.

why do we need to have a business plan

About the Author

The Important Site

10 Reasons Why Planning Is Important

You’re facing a decision or problem. It could be at work or in your personal life. You could be taking this step alone or with a team. Whatever the scenario, you need a plan. Planning is important for organizations, like a business wanting to expand its reach, and for individuals, like a person who wants to switch jobs. Some projects take more planning than others, but the choices in our lives need a little bit of thought. Here are ten reasons why planning is important:

#1. Planning helps you set appropriate goals

Before you begin to plan, you likely have an idea about what you’re hoping to accomplish. Planning helps you refine that goal and determine if it’s realistic or not. As an example, you might want to increase sales at your job to a specific number. After taking the time to plan, you realize that number was a bit too high based on factors outside your control. You adjust your goal based on this new information.

#2. Planning breaks a problem or goal into smaller pieces

Many problems or goals in your life will be complicated. There are often more than just two paths you could take, so it’s not a matter of just flipping a coin. It can be very overwhelming. Planning helps break down the issue into smaller pieces and distribute tasks when applicable. Even if you’re the only one facing the dilemma, planning turns a larger, more abstract thing into bite-sized activities. It’s like paving a road brick by brick to a resolution in the distance.

#3. Planning reveals weaknesses (and strengths)

As you work through a plan and look at it from every angle, you’ll notice what makes the plan weak and what makes it strong. This is an essential part of planning because if you steamrolled ahead toward your goal, you could end up sabotaging yourself early on. Thinking critically about your plan’s flaws helps you make adjustments. Taking note of its strengths affirms if it’s a good idea.

#4. Planning increases certainty and confidence

Uncertainty is part of every new project or problem-solving endeavor. That creates fear. When you take the time to plan well, you’ll see a boost in your confidence and an increase in certainty. No one can predict the future and there will always be surprises, but planning gives you a much clearer idea about what lies ahead.

#5. Planning increases efficiency

You’ve no doubt heard about projects where people didn’t plan well enough. There’s a big focus on the embarrassment of defeat, but it’s important to also note how much waste occurred . That includes wasted money , talent, and time. Even if a project doesn’t completely fail, the lack of planning means it took more resources than necessary to reach the finish line. Planning well increases efficiency and prevents waste.

#6. Planning reduces risk

Because we can’t know the future, every new endeavor involves risk. In many scenarios, the level of risk determines whether a project or idea can move forward. If your goal involves others – like an organization or a team – the level of risk can determine if they’re willing to give you a shot. How can you address this concern? Explain your plan. You can prove that you’ve thought through the challenges and are prepared to adjust as needed. You show that you’ve done everything you can to reduce risk.

#7. Planning increases your credibility

Speaking of working with organizations and teams, being a good planner is one of the best ways to earn credibility. If you’re in a leadership position (or hope to be), your ability to guide the planning process will determine how successful and respected you are. Good planners know how to set clear, realistic goals and what needs to happen for that goal to be achieved.

#8. Planning encourages creativity

Breaking a big goal into small parts, analyzing the weaknesses, and coming up with ways to reduce risk make a great recipe for innovation. Creative thinkers – like artists, musicians, and writers – often talk about how the boundaries and problem-solving of planning force them to stretch their minds.

#9. Planning improves decision-making

Is it possible to make a good decision without enough information? When you plan, you gather the information necessary to make a thoughtful, well-rounded decision. You’re aware of the challenges and possible problems, which helps you make better decisions each step of the way.

#10. Planning equals more peace of mind

There are many planning benefits – increased efficiency, reduced risk, boosted creativity – but there’s one last benefit that shouldn’t be ignored: peace of mind. Any project or idea that requires a plan will trigger some stress. Planning strips a lot of the uncertainty from the future and boosts your confidence. You’ve thought through everything. You’ve weighed the pros and cons. Stress probably won’t evaporate completely, but you have more peace of mind than you did before planning.


Organize Your Change Initiative Around Purpose and Benefits

why do we need to have a business plan

Connecting a project to core principles — and explaining how it will benefit stakeholders — can spark the motivation required for success.

If there’s one thing that’s certain about the future, it’s that change is here to stay. The ability to constantly transform has become a top priority for organizations. Therefore, change management is now an essential business priority that can’t be overlooked or set aside. Leaders need to urgently develop change and project management competencies across all levels of an organization, from employees and managers to senior executives. This article covers the two most important things leaders should focus on in any change project: purpose and benefits. Every successful change project needs at least one clearly articulated purpose. And the benefits to stakeholders must be clear. By using the approach outlined in this article, you’ll see that the level of engagement and buy-in on your change initiative will increase significantly.

A dramatic shift is taking place in industries everywhere: We have left behind a century dominated by increasing efficiency and are now living in an always-changing environment.  Operating a business in this environment means having a massive proliferation of change projects.

In a survey of 1,284 executives and project management professionals, the majority of senior executive respondents indicated that the number of change projects in their organizations had exploded over the last five years. Some 85% of the respondents had seen an increase in the number of projects, and out of these respondents, 56% had seen a rise of more than 25%. A full 25% of respondents said that the number of projects had increased by more than 50%. This meteoric growth of projects is affecting not only organizations, but also our professional lives and the very nature of work.

Change management can no longer be ignored, relegated, or misunderstood. These fundamental changes have created huge anxiety in the workplace and a natural dislike to change projects. Yet, nowadays, continuous transformation is at the center of the strategy of any organization, small, midsize, or large. Everyone at all levels of organizations — employees, managers, project managers, senior leaders, and CEOs — must understand and adapt to this shift.

Welcome to the Project Economy and a World Driven by Change

While the number of change projects keeps rising, the failure rates continue to be staggering: According to the Standish Group , only 31% of projects are considered successful. The idea that 69% of change projects result in wasted resources and budgets and unrealized benefits is mind-blowing. It requires that we approach change management in a radically different way, not only from a methodological perspective, but also from an organizational, cultural, and pure human perspective.

In fact, most of the current change management methods were developed for a stable world, where change projects were temporary and in addition to day-to-day operations, which were always the priority.

Managing Change

New concepts and tools to address change are emerging. I introduce two of them in the HBR Project Management Handbook : the importance of the purpose behind any change project, and the focus on the benefits.

Purpose: An Easy-to-Apply Tool to Fire Up Engagement

All change and project management methodologies demand that projects have a well-defined business case with often lengthy, technical, and deliverable-focused goals: for example, a new software rollout, a new platform, an expansion program, a new set of company values, a reorganization, or a digital transformation project. Most change projects use financial goals, such as a 10% return on investment (ROI). Yet these goals don’t inspire people to commit passionately to the change initiative.

Besides having a business case, a project should be linked to a higher purpose. People have enormous strengths, and the best leaders know that it’s possible to tap into those strengths through hearts and minds. When a project people work on connects to their inner purpose and passions, they can achieve extraordinary things.

According to the EY Beacon Institute , purpose-driven companies are 2.5 times better at driving innovation and transformation than other companies. At the same time, Deloitte says that, on average, purpose-driven companies report 30% higher levels of innovation and 40% higher levels of workforce retention than their competitors. These statistics are borne out in my own experience: Change initiatives with a higher purpose have significantly higher chances of success than those that don’t inspire people. Understanding the purpose and its connection to the overall strategy is not just crucial for deciding whether to invest or whether the transformation makes sense strategically; it is also a key driver for engaging team members and the organization as a whole, motivating them to support the change initiative.

Remember that people don’t have to be great at something to be passionate about it. Steve Jobs was not the world’s greatest engineer, salesperson, designer, or businessman. But he was uniquely good enough at all these things, and was driven by his purpose and passion for doing something far greater. Conversely, a lack of purpose or conviction about a change project can quickly spread from one team member to the rest of the team.

A remarkable example of setting a compelling purpose for an organizational transformation comes from Sony’s co-founder Akio Morita. At a time when Japan was seen as a cheap-product-copycat country, Morita established that Sony’s purpose was to make Japan known for the quality of its products. Japan —   not Sony. Sony’s purpose was aimed at a higher dimension than its own company — which was bold, yet inspiring to its employees.

An easy method of finding a change project’s purpose is to continuously ask, “Why are we doing the project?” Usually, you need to ask this question three to four times to get to the core purpose. For example, consider the introduction of a new Client Relationship Management (CRM) software system. Most change managers will say that the project is about implementing a new CRM system, but that’s not why we do the project. Instead, ask, “Why do we want the CRM system?” The answer may be “to manage our data more effectively, providing a single source of truth for our customer information.” See — you’ve just gone to a higher-level purpose. Next, ask yourself again why you want this outcome, and you may come up with “to provide a more personalized and responsive service.” You just went to a higher level again, and a higher priority of thinking based on what’s more essential for your company. Then ask again: “Why do we want to provide a more personalized service?” “Because we want our customers to be delighted with our services and retain them over the long term, which will lead to higher revenues.”

We’ve now moved the purpose of our project from installing a new CRM system to a project that will increase customer satisfaction and improve sales performance. What a difference. Now, we have a project whose purpose connects with the organization’s strategy and will motivate project team members.

Once you’ve gotten to the real reason behind your change project, ask “By when?” and “How much?”. Here’s an example: “We’ll increase customer satisfaction by 50% for our next customer survey, which will take place in five months.” Now, you have a specific, measurable, actionable, relevant, and time-based goal, what I call a SMART purpose.

Every successful change project needs at least one clearly-articulated SMART purpose.

Benefits : The Key to Obtaining Buy-In From Stakeholders

Traditional change management practices have focused on the inputs and outputs — things like plans, schedules, budgets, deliverables, teams, etc. A change initiative is considered successful if it is delivered on time, on budget, and within scope. Yet, what matters most are the outcomes and benefits delivered, such as happier employees, returning customers, more sustainable practices, etc.

A great example of putting the focus on benefits is a sustainability transformation. Sustainability has become one of the most profound challenges of our time and a priority topic on most CEO’s agendas. Consider this example from Procter & Gamble (P&G): Marc Pritchard, a top marketer at P&G, has recently described how the world’s biggest consumer goods company is embracing sustainability to transform its brands. Or, as he puts it, to make P&G “a force for good and a force for growth.” As part of its new Ambition 2030 plan , P&G has pledged to make all its packaging fully recyclable or reusable by 2030. The company also plans to use 100% renewable energy and have zero net waste by that point.

While benefits might be easy to claim, they’re far more challenging to validate and measure, mainly when they’re accruing over time. Since a change project’s success should be measured by the benefits achieved, the process you use for identifying and mapping the benefits must be inclusive and transparent.

Each project will bring different benefits to different stakeholders. Change managers and project leaders should identify the main benefit expectations for each key stakeholder early in the transformation. Here is a simple approach to identifying the main benefits of your change projects:

Example of a Benefits Plan for a Digital Transformation project. This is an example of a Benefits Plan for a Digital Transformation project. Once you have identified the benefits for your key stakeholders, plot them into a benefits plan, which you should use to show progress when communicating with key stakeholders. In this example, 7 benefits are shown, with expected time to completion, and intermediate and completed milestones plotted by month. Benefit one: Save $40 million in maintenance costs in 7 months. Intermediate milestone of $20 million saved at 4-month mark. Benefit two: Reduce time to market from 12 months to 6 months, within 4 months. Intermediate milestone at 2-month mark, with time to market of 9 months. Benefit three: Increase net promoter score from 50 to 80 in 5 months. Intermediate milestones at the 2-month mark, with an NPS of 60, and at the 4-month mark, with an NPS of 70. Benefit four: Expand product offering to deliver an increase of 30% in revenues from new products in 12 months. Intermediate milestones at the 4-month mark, with a 10% increase, and at the 8-month mark, with a 20% increase in revenues. Benefit five: Improve real-time data on client issues to increase product reliability and reduce customer complaints by 80% in 6 months. Intermediate milestone at the 4-month mark, with a 40% reduction in customer complaints. Benefit six: Reduce time spent in meetings by 50% to increase productivity, within 7 months. Intermediate milestones at the 2-month mark, with a 20% reduction in time spent in meetings, and at the 5-month mark, with a 40% reduction. Benefit seven: Increase the number of patents by 25% in 12 months. Intermediate milestones at the 3-month mark, with a 10% increase in patents, and at the 7-month mark, with a 20% increase. Source: Antonio Nieto-Rodriguez

See more HBR charts in Data & Visuals

Example of the Benefits Card for a Digital Transformation project. Each project will bring different benefits to different stakeholders. Change managers and project leaders should use the benefits card to identify the main benefit expectations for each key stakeholder early in the transformation. This is an example of the Benefits Card for a Digital Transformation project that shows 4 benefits, lists their key performance indicators, or K P eyes, and provides an example. Benefit one: Improved efficiency. Objective: Reduce the time and resources required to complete tasks and processes. K P eyes: Time-to-complete for key processes. Reduction in manual data entry. Reduction in error rates. Increase in process automation levels. Increase in throughput or productivity. Example: Delta Air Lines implemented a digital transformation project to improve their maintenance processes. They equipped their maintenance teams with mobile devices to access real-time information about aircraft maintenance schedules, reducing the time required to complete maintenance tasks and improving operational efficiency. As a result, they saved over $40 million in maintenance costs in the first year. Benefit two: Increased agility. Objective: Improve the organization’s ability to respond quickly to changing circumstances. K P eyes: Time-to-market for new products or services. Number of successful product launches or service offerings. Reduction in time to make business decisions. Increase in speed of adapting to new trends. Number of successful partnerships formed. Example: The clothing retailer Zara used digital transformation to improve its supply chain and reduce the time it took to bring new fashion collections to market. They implemented an end-to-end digital process that allowed them to quickly analyze customer preferences and trends, design and produce new clothing items, and deliver them to stores in just a few weeks. This allowed Zara to respond rapidly to changes in fashion trends and remain competitive in a fast-paced industry. Benefit three: Enhanced customer experience. Objective: Improve customer satisfaction and loyalty by providing a more personalized and engaging experience. K P eyes: Customer satisfaction scores. Net Promoter Score. Number of repeat customers. Increase in customer engagement levels. Reduction in customer churn rates. Example: The coffee chain Starbucks uses digital transformation to enhance the customer experience through its mobile ordering and payment app. The app allows customers to order and pay for their drinks in advance, reducing waiting times and increasing convenience. It also offers personalized recommendations based on previous orders and integrates with the Starbucks Rewards loyalty program, providing customers with incentives to continue using the app. Benefit four: Increased revenue. Objective: Generate more revenue by expanding into new markets, creating new products, or offering new services. K P eyes: Revenue growth rate. Number of new customers acquired. Sales conversion rates. Average order value. Profit margins for new products or service. Example: The financial services company American Express launched a digital transformation initiative to expand its product offerings and improve customer experiences. They developed a suite of digital tools and services, including a mobile app, online banking platform, and digital payment services, to reach new customers and provide more value to existing ones. This resulted in an increase in revenue and a significant improvement in customer satisfaction scores. Source: Antonio Nieto-Rodriguez

By using this approach, you’ll see that the level of engagement and buy-in on your initiative will significantly increase.

Today, organizations need to change regardless of whether they are successful or not. They can not wait years to start obtaining benefits; leaders need to create value faster than ever. Constant transformation has become a top priority. Therefore, change management is now an essential business priority that can’t be overlooked or set aside; leaders must start adopting new concepts like purpose and benefits. And they need to urgently develop change and project management competencies across all levels of an organization, from employees and managers to senior executives. Some visionary leaders have already embarked on this transformation, and if you hesitate or wait too long, you might be putting the future of your organization seriously at stake. If there’s one thing that’s certain about the future, it’s that change is here to stay.

why do we need to have a business plan

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5 Reasons You Need a Business Plan for Long-Term Success

Do You Really Need a Business Plan?

Alyssa Gregory is an entrepreneur, writer, and marketer with 20 years of experience in the business world. She is the founder of the Small Business Bonfire, a community for entrepreneurs, and has authored more than 2,500 articles for The Balance and other popular small business websites.

why do we need to have a business plan

Entrepreneurs who are starting a new business often wonder, "Do I really need a business plan? Is writing a business plan really the best use of my time?" The answer to these questions is almost always, "Yes." A business plan is an integral part of starting a new business.

In reality, business plans can take a long time to write, require that you have a tremendous amount of data at your fingertips, depend in part on projections and often are responsible for creating a long list of research you still need to conduct and other work you need to complete.

Plus, not everyone is sold on the usefulness of a business plan. Consider the study of 116 new businesses conducted by Babson College. The study found that the presence of a formal business plan before starting a small business made no difference in the ultimate success of the business, assuming it was one that was not seeking outside funding.

Some also argue that taking the time required to create a business plan can stifle the startup process and cost precious opportunities for a small business.

On the other hand,  one study  found that entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical non-planning entrepreneurs. Other  studies  have shown that while completing a business plan is not a guarantee of success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to run a successful business.

So why not arm yourself with one of the best tools a small business owner can have? If you're still on the fence, consider these five reasons you should write a business plan before doing anything else in your small business.

1. A Business Plan Is Simply a Must-Have for Some Businesses

If you plan to approach a financial institution for a loan, apply for a small business grant , pitch your business idea to investors, or enlist the support of a business partner, a business plan is required.

Potential investors and supporters want to see the true potential of your business idea clearly laid out in hard facts and numbers. A business plan is the best, and generally, the only acceptable way to provide this information.

2. A Business Plan Helps You Make Decisions

There are some sections in a traditional business plan that you simply cannot complete if you are on the fence, undecided, or not fully committed to a certain point. Business plans help you eliminate the gray area because you have to write specific information down in black and white. Making tough decisions is often one of the hardest and most useful parts of writing a business plan.

For example, if you have not decided on exactly what products you will sell at what price points, it will be very difficult for you to complete the Products and Services Section of your business plan. Identifying this and other vital information is a valuable end product of the business planning process.

3. A Business Plan Can Be a Reality Check

Writing a business plan is often the first real struggle for the small business owner who wants to launch a new venture, but doesn't want to consider that his or her business idea may be a bit flawed or is not yet fully developed.

While this is an unwelcome and terrifying thought for an impassioned entrepreneur, identifying gaps early on in the process gives business owners a chance to shore up their research, test their ideas and take steps to make the business stronger and more viable. This may initially be a step back, but any and all further work can bolster the entrepreneur's chance of success before he or she invests time and money in a business that is likely to fail.

4. A Business Plan Can Give You New Ideas

Discovering new ideas, different approaches and fresh perspectives are some of the best things that can happen from the depths of the business planning process. Despite the sometimes negative reputation, a business plan isn't just a long, stiff and structured document.

In fact, an effective business plan is the opposite; it's a flexible, growing and dynamic tool that can help you think creatively and come up with new solutions for some of your toughest business challenges. This is especially true when you consider the Marketing Strategy Section . Here, as you create a blueprint for your marketing activities, creativity and fresh ideas are invaluable.

5. A Business Plan Creates an Action Plan

A business plan is a useful document for any small business owner. But when you use your business plan as a tool to help you outline action items, next steps, and future activities, you are creating a living, breathing document that not only outlines where you are and where you want to be but also gives you the directions you need to get there.

Going back to the original question of whether or not you really need a business plan, you may still be able to build a successful business without a plan, but it is most certainly easier to do with a well-constructed business plan in your hands.

Keep in mind that if you are using your plan as a true business planning tool, you don't have to wait until you have all of the answers to get started. You can create an outline of your plan now, filling in all of the information you have at this point, and then work on the blanks as you learn more about the market. This type of fluid and flexible document can be invaluable to a new business.

For more on business plans, review this business plan outline . Then, for a quick and painless start to the business planning process, try this simple business plan template.

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10 Reasons Why You Need a Business Plan

Importance of Business Plan_ 10 Reasons Why You Need a Business Plan

Ultimate Guide On Writing A Business Plan

If you have recently started your own business or are thinking of doing so, you might be overwhelmed by all the documentation you need to do. And it isn’t always clear why either which only adds to the confusion. One such document—and the most important one at that—is a business plan.

A business plan is the first document you create after you decide to set up your business. It is a roadmap to your business goals—highlighting the essentials needed to achieve them such as your marketing process , financial reports, customer analysis , operational plan, etc.

No matter the industry, every business has to face the volatility of its environment. Luckily, a business plan makes it easier to withstand these market fluctuations by helping you manage resources, maintain uniformity, and secure financial support.

Importance of Business Plan

Explore business plans in details, turn your ideas into actions, what is the purpose of a business plan.

A business plan serves many purposes. At its core, it’s a guide to your business journey—encapsulating all areas of interest from the inside and out. With a personalized business plan set in place, you can do the following:

Let’s explore the Reasons Why You Need a Business Plan in detail.

1. Test the Practicality of Your Business Ideas

If you’re a new entrepreneur, you probably have a ton of ideas in mind for your business but are unsure of how to actualize them. This is where a business plan can help turn your ideas into real projects.

Since business plans are cohesive by design, they help you test out the practicality of your business ideas . It takes you through all the stages of running your business including the resources needed to get started and achieve short-term and long-term goals.

Doing so urges you to think rationally before starting your business venture. This way, you can save time and money by canceling out the ideas that only seem good in your imagination but are unrealistic, unviable, or too risky.

Questions to test business idea

For instance, here are a few basic questions your business plan would cover:

2. Demonstrate Feasibility to Investors

Acquiring financial support is one of the biggest challenges of building a business. Whether it’s a bank or a venture capitalist, every investor wants to know the potential and feasibility of your business idea before putting their money into it.

This is precisely why investors require you to submit a business plan to answer all their queries. Your business plan acts as evidence that your business idea can survive the competition and risks of the market and generate good ROI.

3. Refine Business Strategies and Tactics

As mentioned before, your business plan is a roadmap designed to help you reach your business milestones . While writing a business plan , you formulate strategies, elaborate on how you plan to implement them, and mention when you will set them in motion.

Refine business strategies and tactics

A lot of research goes into creating this document. And in the process, you can identify and fix flaws and inconsistencies in your tactics. Doing this beforehand helps you avoid wasting scarce resources. It also helps foresee obstacles and prepare counteractive measures to overcome them.

4. Organize and Manage Business Activities

Organize and manage business activities

A business plan includes an in-depth explanation of your business activities and how you will manage them. The format of a business plan includes all the major activities of your company, including:

Your business plan serves as an instruction manual for you and your employees to refer to whenever there’s confusion. Having standardized procedures helps increase consistency and uniformity of operations—making sure things are done according to expectations.

A business plan acts as a guide for your team members in case of your absence.

5. Track Your Progress in Real-time

Track your progress in real-time

Writing a business plan helps you articulate your ultimate mission of starting your venture. Using the operations section of your business plan , you keep track of the progress you make toward achieving your current objectives via the metrics relevant to you.

This can include increased production, reduced wasteful expenditure, improved product quality, etc. This section also encompasses the roles your team members perform and how they contribute.

6. Reduce the Probability of Failure

Businesses fail due to numerous reasons. However, there are always examples out there to understand the common factors that can bring your business down to its last days. Some of the common reasons are:

A business plan covers sections that address all of these in-depth—making it easier for you to identify the risks that your business is subject to. Using these insights, you can equip yourself with the tools needed to safeguard yourself against potential failures.

7. Manage Finances

Manage finances

The success of a business is judged by its profitability—which, in turn, is dependent on how well you manage your financial assets. And while doing so is tricky, having a business plan makes the process less convoluted. The financial section of your business plan includes all the essentials of finance and accounting.

Your business plan provides a comprehensive picture of the following:

8. Build an Information Pool

Whenever you need to inform or brief your employees or contractors about a particular aspect of your business, you need a perfectly crafted error-free guide. But creating one for every context can be taxing. If you have a business plan, you can avoid this step.

A business plan is essentially a reflection of your entire business. It contains every detail of your company. This makes it easy for you to share particular parts of your business plan whenever it is necessary.

9. Stay Prepared for Critical Situations

Drafting a business plan pushes you to address the uncomfortable and challenging situations that may come your way in the future. Doing so ensures that you have a strategy set in place to deal with such situations.

This is essential because it is difficult to predict when a crisis can occur. However, it is possible to identify what these situations may look like.

While writing a business plan, you study various external and internal factors of your business, identify potential challenges, and tabulate them with a SWOT analysis . This will help develop contingent strategies to deal with predictable challenges.

10. Prepare an Exit

Business Prepare an exit

Your business plan not only helps you run your business but also helps you exit it when you need to. Many entrepreneurs plan a lot for starting their business but not enough of them plan for when they will need to liquidate their business or transfer the ownership.

You choose an exit strategy for reasons relevant to you. For instance, you might want to exit when you have successfully achieved your end business goals and want to focus on something else. Or, perhaps, you are selling your business to an acquirer.

Turn Your Ideas into Actions with a Business Plan

A business plan is an invaluable planning and management tool. It addresses and covers every step of setting up your enterprise, running it, and steering it toward your mission. Create a well-researched business plan for your company that serves all the above purposes.

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Nine reasons why you need a business plan

Building a great business plan helps you plan, strategize and succeed. Presented by Chase for Business .

why do we need to have a business plan

Making the decision to create a new business is an exciting yet stressful experience. Starting a business involves many tasks and obstacles, so it’s important to focus before you take action. A solid business plan can provide direction, help you attract investors and ensure you maintain momentum.

No matter what industry you plan on going into, a business plan is the first step for any successful enterprise. Building your business plan helps you figure out where you want your business to go and identify the necessary steps to get you there. This is a key document for your company to both guide your actions and track your progress.

What is the purpose of a business plan?

Think of a business plan like a roadmap. It enables you to solve problems and make key business decisions, such as marketing and competitive analysis, customer and market analysis and logistics and operations plans.

It can also help you organize your thoughts and goals, as well as give you a better idea of how your company will work. Good planning is often the difference between success and failure.

Here are nine reasons your company needs a business plan.

1. Prove your idea is viable

Through the process of writing a business plan, you can assess whether your company will be successful. Understanding market dynamics, as well as competitors, will help determine if your idea is viable.

This is also the time to develop financial projections for your business plan, like estimated startup costs, a profit and loss forecast, a break-even analysis and a cash flow statement . By taking time to investigate the viability of your idea, you can build goals and strategies to support your path to success.

A proper business plan proves to all interested parties—including potential investors, customers, employees, partners and most importantly yourself — that you are serious about your business.

2. Set important goals

As a business owner, the bulk of your time will mostly likely be spent managing day-to-day tasks. As a result, it might be hard to find time after you launch your business to set goals and milestones. Writing a business plan allows you to lay out significant goals for yourself ahead of time for three or even five years down the road. Create both short- and long-term business goals. 

3. Reduce potential risks

Prevent your business from falling victim to unexpected dangers by researching before you break ground. A business plan opens your eyes to potential risks that your business could face. Don’t be afraid to ask yourself the hard questions that may need research and analysis to answer. This is also good practice in how your business would actually manage issues when they arise. Incorporate a contingency plan that identifies risks and how you would respond to them effectively.

The most common reasons businesses fail include:

Lack of capital is the most prevalent reason why businesses fail. To best alleviate this problem, take time to determine how your business will generate revenue. Build a comprehensive model to help mitigate future risks and long-term pain points. This can be turned into a tool to manage growth and expansion.

4. Secure investments

Whether you’re planning to apply for an SBA loan , build a relationship with angel investors or seek venture capital funding, you need more than just an elevator pitch to get funding. All credible investors will want to review your business plan. Although investors will focus on the financial aspects of the plan, they will also want to see if you’ve spent time researching your industry, developed a viable product or service and created a strong marketing strategy.

While building your business plan, think about how much raised capital you need to get your idea off the ground. Determine exactly how much funding you’ll need and what you will use it for. This is essential for raising and employing capital.

5. Allot resources and plan purchases

You will have many investments to make at the launch of your business, such as product and services development, new technology, hiring, operations, sales and marketing. Resource planning is an important part of your business plan. It gives you an idea of how much you’ll need to spend on resources and it ensures your business will manage those resources effectively.  

A business plan provides clarity about necessary assets and investment for each item. A good business plan can also determine when it is feasible to expand to a larger store or workspace.

In your plan, include research on new products and services, where you can buy reliable equipment and what technologies you may need. Allocate capital and plan how you’ll fund major purchases, such as with a Chase small business checking account or business credit card .

6. Build your team

From seasoned executives to skilled labor, a compelling business plan can help you attract top-tier talent, ideally inspiring management and employees long after hiring. Business plans include an overview of your executive team as well as the different roles you need filled immediately and further down the line.

Small businesses often employ specialized consultants, contractors and freelancers for individual tasks such as marketing, accounting and legal assistance. Sharing a business plan helps the larger team work collectively in the same direction. 

This will also come into play when you begin working with any new partners. As a new business, a potential partner may ask to see your business plan. Building partnerships takes time and money, and with a solid business plan you have the opportunity to attract and work with the type of partners your new business needs.

7. Share your vision 

When you start a business, it's easy to assume you'll be available to guide your team. A business plan helps your team and investors understand your vision for the company. Your plan will outline your goals and can help your team make decisions or take action on your behalf. Share your business plan with employees to align your full staff toward a collective goal or objective for the company.  Consider employee and stakeholder ownership as a compelling and motivating force. 

8. Develop a marketing strategy

A marketing strategy details how you will reach your customers and build brand awareness. The clearer your brand positioning is to investors, customers, partners and employees, the more successful your business will be.

Important questions to consider as you build your marketing strategy include:

With a thoughtful marketing strategy integrated into your business plan, your company goals are significantly more in reach.

9. Focus your energy

Your business plan determines which areas of your business to focus on while also avoiding possible distractions. It provides a roadmap for critical tradeoffs and resource allocation.

As a business owner, you will feel the urge to solve all of your internal and customers’ problems, but it is important to maintain focus. Keep your priorities at the top of your mind as you set off to build your company.

As a small business owner, writing a business plan should be one of your first priorities. Read our checklist for starting a business, and learn how to take your business from a plan to reality. When you’re ready to get started, talk with a Chase business banker to open a Chase business checking or savings account today.

For Informational/Educational Purposes Only: The views expressed in this article may differ from other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.

JPMorgan Chase Bank, N.A. Member FDIC. Equal Opportunity Lender, ©2023 JPMorgan Chase & Co

Do You Really Need a Business Plan?

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Do You Really Need a Business Plan?

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How to Write a Business Plan for Your Small Business

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2023 Gen Z and Millennial Survey

The 12th edition of Deloitte’s Gen Z and Millennial Survey looks back to see how the last three years have impacted these generations and finds that while they acknowledge some positive change, they remain deeply concerned about their futures.

Portrait Of Confident Young Man At Illuminated Amusement Park

The survey of more than 22,000 Gen Zs and millennials across 44 countries examines their shifting relationship with work, how they continue to make lifestyle and career decisions based on their values, and underscores continuing concerns about finances, climate change, and mental health.

Gen Zs and millennials recognize progress, but they are expecting more.

Let’s make this work.

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Employers have made progress since pre-pandemic times, but business is still not meeting expectations

Satisfaction with work/life balance and employer's DEI and societal impact efforts have improved.

While these positive trends show Gen Zs and millennials are slightly more satisfied with their own employers, they are not convinced that business more broadly is having a positive impact. And new setbacks are hampering their ability to plan for their futures.

Progress since 2019

The high cost of living looms large for gen zs and millennials.

Once again, the high cost of living is the top societal concern for both Gen Zs and millennials, ahead of unemployment and climate change.

Half of Gen Zs and millennials say they live paycheck to paycheck. And they are taking on side jobs to make ends meet.

Economic uncertainty is causing them to postpone big life decisions—many say it will become harder or impossible to buy a house, start a family, ask for a promotion, or start a new job if the economy doesn’t improve.

Gen Zs and millennials are facing increased financial concerns year over year

Gen zs and millennials are rethinking the role of work in their lives.

The pandemic prompted a rethinking of the role work plays in their lives. While 49% of Gen Zs and 62% of millennials say work is central to their identity, they place a strong focus on work/life balance—the top trait they admire in their peers, and their top consideration when choosing an employer.

To help them achieve better balance, Gen Zs and millennials want flexibility in where and when they work. Many respondents now work in hybrid or remote work patterns, a benefit they value deeply.

Gen Zs and millennials would also like their employers to offer better career advancement opportunities for part-time employees, more part-time jobs overall, and the option for more flexible hours for full-time employees, for example the ability to work condensed four-day work weeks.

Professionals working on their laptops in breakout area of office

77% of Gen Zs and 75% of millennials who are currently in remote or hybrid roles would consider looking for a new job if their employer asked them to work on-site full-time.

Employers' efforts to improve mental health support are having a positive impact, but stigma remains

Nearly half of Gen Zs and four in 10 millennials say they feel stressed all or most of the time.

The majority of respondents consider mental health support and policies to be very important when considering a potential employer. And many respondents believe that their employers are taking mental health seriously and driving positive change.

But, despite this progress, mental health support and resources are still under-utilized, and many don’t feel they can talk to their employers about mental health.

Those who...

Climate change is a major concern for gen zs and millennials. it’s impacting their lifestyle and career decisions.

Six in 10 Gen Zs and millennials say they have felt anxious about the environment in the past month, and these concerns are impacting their career and lifestyle decisions. About one in six have already changed jobs or industries due to climate concerns, with another quarter planning to do so in the future.

They want to be empowered to drive change within their organizations. And about half of Gen Zs and millennials say they are pressuring businesses to act on climate change, yet few respondents say they feel able to influence their organization’s sustainability efforts.

Gen Zs and millennials want their employers to support and empower them to make more sustainable decisions in their own lives, and to develop the skills needed for the transition to a low-carbon economy.

why do we need to have a business plan

“My main financial concern will be ensuring I can have a comfortable work/life balance, as at present I am struggling to maintain this due to picking up a lot of overtime to make ends meet.”

why do we need to have a business plan

“Although it takes up a large amount of our time, life doesn't necessarily have to be all about work. It's because I have a job that I'm able to enjoy my personal life. And it's because I enjoy my personal life that I'm able to work hard at my job. I reckon it's precisely because I have fulfilment in both of these areas that I'm able to be my true self.”

why do we need to have a business plan

“It is very important for me to work remotely and work flexible hours. It gives me more time to take care of my personal life, my mental health, my home life with my partner and for me to have better quality of life…Flexibility is very important, and I believe it is a trend without return, that all employers should adapt to.”

why do we need to have a business plan

“I have rejected some jobs because the companies are only interested in your services, rather than paying attention to how their employees are, so that they can perform to their best ability in the workplace. In this case, I’m specifically referring to the issues of mental health, and gender equality.”

why do we need to have a business plan

“I’ve turned down employers and assignments, because I believe in environmental sustainability, and I refuse to be part of something that does not take the environment into account.”

Young woman practicing rock-climbing on a rock wall indoors

Gen Zs and millennials are facing a unique combination of challenges during a pivotal point in their lives as they progress in their careers and plan for their futures. It is crucial for employers to understand these generations and continue driving progress on the issues that matter most to them. This will not only help boost productivity and retain talent—it will ultimately build trust and value for business in society more broadly.

Employers can—and must—act. As businesses face new headwinds, it will be important to stay focused on maintaining the progress they've made and driving greater momentum.

Download the 2023 Gen Z and Millennial Survey

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Michele Parmelee

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why do we need to have a business plan

The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

Send invoices, get paid, track expenses, pay your team, and balance your books with our free financial management software.

2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A graphic showing you a “Business Plan Outline.” There are four sections on the left side: Executive Summary at the top, Company Description below it, followed by Market Analysis, and lastly Organization and Management. There was four sections on the right side. At the top: “Service or Product Line.” Below that, “Marketing and Sales.” Below that, “Funding Request.” And lastly: “Financial Projections.” At the very bottom below the left and right columns is a section that says “Appendix.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

why do we need to have a business plan

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

why do we need to have a business plan

What Is a Business Plan?

Understanding business plans, how to write a business plan, elements of a business plan, special considerations.

Business Plan: What It Is, What's Included, and How To Write One

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

why do we need to have a business plan

Investopedia / Ryan Oakley

A business plan is a document that defines in detail a company's objectives and how it plans to achieve its goals. A business plan lays out a written road map for the firm from marketing , financial, and operational standpoints. Both startups and established companies use business plans.

A business plan is an important document aimed at a company's external and internal audiences. For instance, a business plan is used to attract investment before a company has established a proven track record. It can also help to secure lending from financial institutions.

Furthermore, a business plan can serve to keep a company's executive team on the same page about strategic action items and on target for meeting established goals.

Although they're especially useful for new businesses, every company should have a business plan. Ideally, the plan is reviewed and updated periodically to reflect goals that have been met or have changed. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.

Key Takeaways

Want Funding? You Need a Business Plan

A business plan is a fundamental document that any new business should have in place prior to beginning operations. Indeed, banks and venture capital firms often require a viable business plan before considering whether they'll provide capital to new businesses.

Operating without a business plan usually is not a good idea. In fact, very few companies are able to last very long without one. There are benefits to creating (and sticking to) a good business plan. These include being able to think through ideas before investing too much money in them and working through potential obstacles to success.

A good business plan should outline all the projected costs and possible pitfalls of each decision a company makes. Business plans, even among competitors in the same industry, are rarely identical. However, they can have the same basic elements, such as an executive summary of the business and detailed descriptions of its operations, products and services, and financial projections. A plan also states how the business intends to achieve its goals.

While it's a good idea to give as much detail as possible, it's also important that a plan be concise to keep a reader's attention to the end.

A well-considered and well-written business plan can be of enormous value to a company. While there are templates that you can use to write a business plan, try to avoid producing a generic result. The plan should include an overview and, if possible, details of the industry of which the business will be a part. It should explain how the business will distinguish itself from its competitors.

Start with the essential structure: an executive summary, company description, market analysis, product or service description, marketing strategy, financial projections, and appendix (which include documents and data that support the main sections). These sections or elements of a business plan are outlined below.

When you write your business plan, you don’t have to strictly follow a particular business plan outline or template. Use only those sections that make the most sense for your particular business and its needs.

Traditional business plans use some combination of the sections below. Your plan might also include any funding requests you're making. Regardless, try to keep the main body of your plan to around 15-25 pages.

The length of a business plan varies greatly from business to business. Consider fitting the basic information into a 15- to 25-page document. Then, other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and included as appendices.

As mentioned above, no two business plans are the same. Nonetheless, they tend to have the same elements. Below are some of the common and key parts of a business plan.

Unique Business Plans Help

The best business plans aren't generic ones created from easily accessed templates. A company should entice readers with a plan that demonstrates its singularity and potential for success.

Types of Business Plans

Business plans help companies identify their objectives and remain on track to meet goals. They can help companies start, manage themselves, and grow once up and running. They also act as a means to attract lenders and investors.

Although there is no right or wrong business plan, they can fall into two different categories—traditional or lean startup. According to the Small Business Administration (SBA) , the traditional business plan is the most common. It contains a lot of detail in each section. These tend to be longer than the lean startup plan and require more work.

Lean startup business plans, on the other hand, use an abbreviated structure that highlights key elements. These business plans aren't as common in the business world because they're short—as short as one page—and lack detail. If a company uses this kind of plan, it should be prepared to provide more detail if an investor or lender requests it.

Financial Projections

A complete business plan must include a set of financial projections for the business. These forward-looking financial statements are often called pro-forma financial statements or simply the " pro-formas ." They include an overall budget, current and projected financing needs, a market analysis, and the company's marketing strategy.

Other Considerations for a Business Plan

A major reason for a business plan is to give owners a clear picture of objectives, goals, resources, potential costs, and drawbacks of certain business decisions. A business plan should help them modify their structures before implementing their ideas. It also allows owners to project the type of financing required to get their businesses up and running.

If there are any especially interesting aspects of the business, they should be highlighted and used to attract financing, if needed. For example, Tesla Motors' electric car business essentially began only as a business plan.

Importantly, a business plan shouldn't be a static document. As a business grows and changes, so too should the business plan. An annual review of the company and its plan allows an entrepreneur or group of owners to update the plan, based on successes, setbacks, and other new information. It provides an opportunity to size up the plan's ability to help the company grow.

Think of the business plan as a living document that evolves with your business.

A business plan is a document created by a company that describes the company's goals, operations, industry standing, marketing objectives, and financial projections. The information it contains can be a helpful guide in running the company. What's more, it can be a valuable tool to attract investors and obtain financing from financial institutions.

Why Do Business Plans Fail?

Even if you have a good business plan, your company can still fail, especially if you do not stick to the plan! Having strong leadership with a focus on the plan is always a good strategy. Even when following the plan, if you had poor assumptions going into your projections, you can be caught with cash flow shortages and out-of-control budgets. Markets and the economy can also change. Without flexibility built into your business plan, you may be unable to pivot to a new course as needed.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers a quick explanation of its business. The company may feel that it doesn't have a lot of information to provide since it's just getting started.

Sections can include: a value proposition, a company's major activities and advantages, resources such as staff, intellectual property, and capital, a list of partnerships, customer segments, and revenue sources.

Small Business Administration. " Write Your Business Plan ."

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The scientific benefits of business planning

Do You Need a Business Plan? Scientific Research Says Yes

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Noah Parsons

13 min. read

Updated March 8, 2023

Male entrepreneur sitting in an office in front of computer. Reviewing a research study covering the impact of small business success due to planning.

Should you spend some time developing a plan for your business, or just dive in and start, figuring things out as you go? There has been plenty of debate on this topic, but no one has pulled together the scientific evidence to determine if planning is worthwhile—until now .

With the help of my friend Jeff, from the University of Oregon, I’ve been looking at academic research on business planning—the actual science around planning and how it impacts both startups and existing businesses.

But, before we dive into the data, why do we even need to look at research on business planning? It seems like most advice on  starting a business  includes writing a business plan as a necessary step in the startup process. If so many people encourage you to write one, business plans must add value, right?

Well, over the past few years, there’s been a lot of controversy about the value of business plans. People look at certain companies that have been very successful but haven’t written business plans and conclude that planning is a waste of time.

After all, taking the time to plan is a bit of a trade-off. The time you spend planning could be time spent building your company. Why not just “get going” and learn as you build your company, instead of taking the time to formulate a strategy and understand your assumptions about how your business might grow?

Well, the research shows that it’s really not a “write a plan” or “don’t write a plan” conversation. What really  matters is what kind of planning you do  and how much time you spend doing it.

On this page

Planning can help companies grow 30 percent faster

The quality of the plan matters, being prepared matters when you’re seeking funding, when you start planning is important—the earlier the better, planning makes you more likely to start your business, you’re less likely to fail if you have a plan, your success depends on the type of planning you do.

One study (1) published in 2010 aggregated research on the business growth of 11,046 companies and found that  planning improved business performance . Interestingly, this same study found that planning benefited existing companies even more than it benefited startups.

But, this study still doesn’t answer the question it raises:

Why would planning help a business that has a few years of history more than one that is just starting up?

The answer most likely lies in the fact that existing businesses know a bit more about their customers and what their needs are than a new startup does. For an existing business, planning involves fewer guesses or assumptions that need to be proven, so the strategies they develop are based on more information.

Another study (2) found that  companies that plan grow 30 percent faster  than those that don’t plan. This study found that plenty of businesses can find success without planning, but that businesses with a plan grew faster and were more successful than those that didn’t plan.

To reinforce the connection between planning and fast growth, yet another study (3) found that fast-growing companies—companies that had over 92 percent growth in sales from one year to the next—usually have business plans. In fact,  71 percent of fast-growing companies have plans . They create budgets, set sales goals, and document their marketing and sales strategies. These companies don’t always call their plans “business plans” but instead often refer to things like strategic plans, growth plans, and operational plans. Regardless of the name, it’s all forward-looking planning.

Action:  Carve out some time to set goals and build a plan for your business. More importantly,  re-visit your plan as you grow  and revise it as you learn more about your business and your customers.

Business planning is not an activity you undertake only when you’re getting your business up and running. It should be something you return to, time and time again, to revise and improve upon based on new knowledge.

But, it’s not as simple as it might appear. Just having a plan doesn’t guarantee faster growth.  It’s the kind of plan you have and how you use it that really matters .

It turns out that startups, especially ones building highly innovative businesses, should create shorter, less detailed plans (4). That’s because these innovative startups are learning new things about their product and customers at a very fast pace and their strategies change more frequently. Simpler plans get updated more frequently and are more helpful to these companies because they can review their strategy at a glance.

Meanwhile, more established companies know a lot more about their products and customers and can craft more detailed strategies that are less likely to change as quickly. For these companies, more detailed planning is generally more helpful.

And it’s not just the size of the plan that matters. What you include in your plan is important as well.

The same study we talked about above—the one that found that businesses grow faster with a plan—also found that companies that did a good job defining their  value proposition  do even better than companies that have a hard time defining their customers’ needs.

These researchers also found that  having a plan is less about accurately predicting the future, and more about setting regular goals, tracking your actual progress toward those goals and making changes to your business as you learn more about your customers.  Silicon Valley businesses like to call the act of changing strategic direction “pivoting.” All it really means is that you need to stay nimble, keep your eyes open, and be willing to make changes in your business as you compare your actual results to your goals and gather additional feedback from your customers.

Action:  Skip the 40-page business plan and instead focus on simpler planning that defines your goals and documents your customers’ needs. Adjust your plan frequently as you learn more about your business.

Start your plan

Over and over again, you hear venture capitalists talk about how much the team matters in a funding decision. Beyond just the team, you also hear them talk about passion—how much the entrepreneur believes in the idea.

But, it turns out that there is something that trumps passion when VCs make their decisions. Research shows (5) that how well an entrepreneur is prepared is much more important than how much passion they have.

This doesn’t mean that VCs will ask for a business plan. In fact, they probably won’t ask for one.

What it means is that entrepreneurs need to have done some planning, in some form, so that they can be prepared to talk intelligently about their idea, their target market, their sales and marketing strategies, and so on.

So, the formal 40-page business plan document may not be useful when you’re pitching VCs. But, you’d better have done some planning, so that you can communicate verbally or through a  pitch deck  what would normally have been found in that written document.

And, not only will business planning help you be more prepared, it will actually improve your chances of getting funded. A study at the University of Oregon (6) found that  businesses with a plan were far more likely to get funding than those that didn’t have a plan .

Action:  Know your business inside and out. Document your strategy in an internal document, but skip all the time and effort creating a well-crafted business plan document.

So, if business planning increases your likelihood of success, and in fact helps you grow faster, when should you start working on a business plan?

Research shows (7) that entrepreneurs who started the business planning process early were better at what the scientists call “establishing legitimacy.” That’s a fancy way of saying that these entrepreneurs used business planning to start the process of talking with potential customers, working with business partners, starting to look for funding, and gathering other information they needed to start their business.

Entrepreneurs that did a good job of using their business plan to “establish legitimacy” early were more likely to succeed and their businesses tended to last longer.

Not only that,  starting the planning process before starting marketing efforts and before talking to customers reduces the likelihood that a business will fail ( 8). 

That said, planning should never take the place of talking to customers. An ongoing planning process—one in which the plan is constantly revised as new information is gathered—requires that you talk to your potential customers so that you can learn more about what they need, what they are willing to pay, and how you can best reach them.

Action:  Start the planning process early. Even if all you do is build out a simple  elevator pitch  to try your idea on for size, it will help you begin the conversation with potential customers and kick-start your business.

If you’re like me, and like most entrepreneurs, you like to dream up new business ideas. You constantly think of new ways to improve existing businesses and solve new problems.

But, most of those dreams never become a reality. They live on as ideas in your head while other entrepreneurs see the same opportunity and find a way to make it happen.

It turns out that there’s a way to turn more of your ideas into a viable business. A study published in  Small Business Economics  found that  entrepreneurs that take the time to create a plan for their business idea are 152 percent more likely to start their business ( 9). Not only that, those entrepreneurs with a plan are 129 percent more likely to push forward with their business beyond the initial startup phase and grow it. These findings are confirmed by another study that found that entrepreneurs with a plan are 260 percent more likely to start their businesses (10). 

Interestingly,  these same entrepreneurs who build plans are 271 percent more likely to close down a business . This seems counterintuitive to the stats above, but when you think about it a bit more, it makes a lot of sense.

Entrepreneurs with plans are tracking their performance on a regular basis. They know when things aren’t going to plan—when sales aren’t meeting projections and when marketing strategies are failing. They know when it’s time to walk away and try a different idea instead of riding the business into the ground, which could have disastrous results.

Action:  If you really want to start a business, start committing your goals and strategy to paper. Even if it’s just a simple  one-page business plan,  that will help you get started faster. And, once you do start, track your performance so you know when to change direction and try something different.

Nothing can absolutely prevent your company from failing, but it turns out that having a plan can help reduce your risks.

Yet another study of 223 companies found that having a plan reduced the likelihood that a business would fail. Having a plan didn’t guarantee success, unfortunately. But, those companies with a plan had better chances of success than those that skipped the planning process.

Having a plan and updating it regularly means that you are tracking your performance and making adjustments as you go. If things aren’t working, you know it. And, if things are going well, you know what to do more of.

Action:  Build a plan, but don’t just stick it in a drawer. Track your performance as you go so you can see if you’re reaching your goals. Your plan will help you discover what’s working so you can build your business.

In the end, creating a business plan seems like common sense. You wouldn’t set out on a trip without a destination and a map, would you?

It’s great to see research back up these common-sense assumptions. The research also validates the idea that the value of business planning really depends on how you approach it.

It’s not a question of whether you should plan or not plan—it’s what kind of planning you do.  The best planning is iterative; it’s kept alive and it adapts.

It’s not about predicting the future as if you’re a fortune teller at a carnival. Instead, it’s a tool that you use to refine and adapt your strategy as you go, continuing to understand your market as it changes and refining your business to the ever-changing needs of your customers.

I recommend starting with a one-page plan. It’s a simpler form of planning where you can start by documenting your business concept on a single page. From there, iterate, gather feedback, and adjust your plan as needed. If you need some inspiration, check out our gallery of over  500 free sample business plans .

Finally, a big “thank you” to  Jeff Gish at the University of Oregon , who was immensely helpful in gathering and analyzing the research mentioned in this article.

What has your experience with business planning been like? Will you approach the planning process differently in the future? Tell me on Twitter @noahparsons.


1 Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning–performance relationship in small firms.  Journal of Business Venturing,  25(1), 24-40. doi: 10.1016/j.jbusvent.2008.10.007

2 Burke, A., Fraser, S., & Greene, F. J. (2010). The multiple effects of business planning on new venture performance.  Journal of Management Studies,  47(3), 391-415.

3 Upton, N., Teal, E. J., & Felan, J. T. (2001). Strategic and business planning practices of fast growth family firms.  Journal of Small Business Management, 39(1), 60-72.

4 Gruber, M. (2007). Uncovering the value of planning in new venture creation: A process and contingency perspective.  Journal of Business Venturing,  22(6), 782-807. doi: 10.1016/j.jbusvent.2006.07.001

5 Chen, X.-P., Yao, X., & Kotha, S. (2009). Entrepreneur passion and preparedness in business plan presentations: A persuasion analysis of venture capitalists’ funding decisions.  Academy of Management Journal,  52(1), 199-214.

6 Ding, E., & Hursey, T. (2010). Evaluation of the effectiveness of business planning using Palo Alto’s Business Plan Pro. Department of Economics. University of Oregon.

7 Delmar, F., & Shane, S. (2004). Legitimating first: Organizing activities and the survival of new ventures.  Journal of Business Venturing,  19(3), 385-410. doi: 10.1016/s0883-9026(03)00037-5

8 Shane, S., & Delmar, F. (2004). Planning for the market: Business planning before marketing and the continuation of organizing efforts.  Journal of Business Venturing,  19(6), 767-785. doi: 10.1016/j.jbusvent.2003.11.001

9 Hechavarria, D. M., Renko, M., & Matthews, C. H. (2011). The nascent entrepreneurship hub: Goals, entrepreneurial self-efficacy and start-up outcomes.  Small Business Economics,  39(3), 685-701. doi: 10.1007/s11187-011-9355-2

10 Liao, J., & Gartner, W. B. (2006). The effects of pre-venture plan timing and perceived environmental uncertainty on the persistence of emerging firms.  Small Business Economics,  27(1), 23-40. doi: 10.1007/s11187-006-0020-0

Content Author: Noah Parsons

Noah is currently the COO at Palo Alto Software, makers of the online business plan app LivePlan.

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15 Reasons You Need a Business Plan Whether you're just starting out, growing your business or seeking outside help, a well-thought-out business plan is the vehicle you need to get you there.

By Tim Berry • Mar 13, 2006

Opinions expressed by Entrepreneur contributors are their own.

Why do you want a business plan? You already know the obvious reasons, but there are so many other good reasons to create a business plan that many business owners don't know about. So, just for a change, let's take a look at the less obvious reasons first and finish with the ones you probably already know about. Think of this as a late-show top 10, with us building up to the most important reasons you need a business plan.

15. Set specific objectives for managers. Good management requires setting specific objectives and then tracking and following up. I'm surprised how many existing businesses manage without a plan. How do they establish what's supposed to happen? In truth, you're really just taking a short cut and planning in your head--and good for you if you can do it--but as your business grows you want to organize and plan better, and communicate the priorities better. Be strategic. Develop a plan; don't just wing it.

14. Share your strategy, priorities and specific action points with your spouse, partner or significant other. Your business life goes by so quickly: a rush of answering phone calls, putting out fires, etc. Don't the other people in your business life need to know what's supposed to be happening? Don't you want them to know?

13. Deal with displacement. Displacement is probably by far the most important practical business concept you've never heard of. It goes like this: "Whatever you do is something else you don't do." Displacement lives at the heart of all small-business strategy. At least most people have never heard of it.

12. Decide whether or not to rent new space. Rent is a new obligation, usually a fixed cost. Do your growth prospects and plans justify taking on this increased fixed cost? Shouldn't that be in your business plan?

11. Hire new people. This is another new obligation (a fixed cost) that increases your risk. How will new people help your business grow and prosper? What exactly are they supposed to be doing? The rationale for hiring should be in your business plan.

10. Decide whether you need new assets, how many, and whether to buy or lease them. Use your business plan to help decide what's going to happen in the long term, which should be an important input to the classic make vs. buy. How long will this important purchase last in your plan?

9. Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Develop new business alliances. Use your plan to set targets for new alliances, and selected portions of your plan to communicate with those alliances.

7. Deal with professionals. Share selected highlights or your plans with your attorneys and accountants, and, if this is relevant to you, consultants.

6. Sell your business. Usually the business plan is a very important part of selling the business. Help buyers understand what you have, what it's worth and why they want it.

5. Valuation of the business for formal transactions related to divorce, inheritance, estate planning and tax issues. Valuation is the term for establishing how much your business is worth. Usually that takes a business plan, as well as a professional with experience. The plan tells the valuation expert what your business is doing, when, why and how much that will cost and how much it will produce.

4. Create a new business. Use a plan to establish the right steps to starting a new business, including what you need to do, what resources will be required, and what you expect to happen.

3. Seek investment for a business, whether it's a startup or not. Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points.

2. Back up a business loan application. Like investors, lenders want to see the plan and will expect the plan to cover the main points.

1. Grow your existing business. Establish strategy and allocate resources according to strategic priority. You can find more information about growing your business with a business plan by reading " Existing Companies Need Planning, Too ."

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Why You Need a Plan: 5 Good Reasons

Developing strategy takes time and resources. It requires the time and commitment of some of the most highly paid and highly experienced people in your organization. So, if your team isn’t willing to invest what is needed, I recommend that you don’t do it. Poor planning is often worse than no planning at all.

So, why do you need a strategy? Why take time for planning? There are many reasons. But the Drivers Model focuses on five in particular.

1) To set direction and priorities:

First and foremost, you need a strategy because it sets the direction and establishes priorities for your organization. It defines your organization’s view of success and prioritizes the activities that will make this view your reality. The strategy will help your people know what they should be working on, and what they should be working on first.

Without a clearly defined and articulated strategy, you may very well find that your priority initiatives—the ones that will drive the highest successare being given secondary treatment.

2) To get everyone on the same page:

If you find that you have departments working to achieve different aims, or going in different directions, you need a strategy.

Once you define your strategic direction, you can get operations, sales, marketing, administration, manufacturing, and all other departments moving together to achieve the organization’s goals.

3) To simplify decision-making:

If your leadership team has trouble saying no to new ideas or potential initiatives, you need a strategy. Why? Your strategy will have already prioritized the activities necessary for success. Priorities make it easier to say no to distracting initiatives.

4) To drive alignment:

Many organizations have hard-working people putting their best efforts into areas that have little to no effect on strategic success. They’re essentially majoring in the minors—because their activities aren’t aligned with the priorities. Your strategy serves as the vehicle for answering the question, “How can we better align all our resources to maximize our strategic success?”

5) To communicate the message:

Many leaders walk around with a virtual strategy locked in their heads—they know where their organization needs to be and the key activities that will get it there. Unfortunately, the strategy isn’t down on paper and hasn’t been communicated thoroughly. As a result, few people are acting on it.

When your staff, suppliers, and even customers know where you’re going, you allow even greater opportunities for people to help you maximize your success in getting there.

Once you recognize the need to plan, you now have the role of becoming the catalyst: for facilitating the buy-in and commitment of your leadership team and the rest of your organization.

I’ve found that very few executives truly understand how to maximize their role in facilitating strategy. This chapter is focused on you, the leader of the organization, and on the vital role you play in facilitating strategy throughout your organization. Let’s get started.


Michael Wilkinson is the CEO and Managing Director of Leadership Strategies, Inc., “The Facilitation Company” and author of Amazon best-seller “ The Secrets of Facilitation ”, “ The Secrets to Masterful Meetings ”, and the brand new “The Executive Guide to Facilitating Strategy.” Leadership Strategies is a global leader in facilitation services, providing companies with dynamic professional facilitators who lead executive teams and task forces in areas like strategic planning , issue resolution, process improvement and others. They are also a leading provider of facilitation training in the United States.

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Michael Wilkinson

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Resources for Starting a Business

Legal Structures of Organizations Legal Forms and Traditional Structures of Organizations Market Research — Inbound Marketing Planning Your Research Market Research Find and Feed the Feeling Strategizing Understanding Strategy and Strategic Thinking Competitor Analysis Porter’s Five Competitive Forces (Part I) Porter’s Five Competitive Forces (Part 2) Competitive Intelligence Product Planning Product Management E-Commerce Sales and …

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Ultimate Business Planning Guide with Updated Resources

Complete Business Planning Guide with Extensive Resources Copyright Carter McNamara, MBA, PhD. NOTE: Your business plan should be highly customized to your current organizational situation. Thus, using a generic business plan template could completely misrepresent the needed focus of your business plan. (This step-by-step manual is a complement to the topic How to Start Your …

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Learn Strategic Thinking from Napoleon

Biographers of Napoleon Bonaparte talk about his ability to size up a situation with a single coup d’oeil,(pronounced koo-DOY), meaning “a stroke of the eye” or “glance.” Napoleon was so knowledgeable about his strategic situation—the landscape, the enemy, available technology, similar situations from the past—that he could understand and respond quickly to ever- changing circumstances. …

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Strategic Planning Facilitator: Guiding the Planning Process

Strategic Planning: The Crucial Role of a Facilitator The goal of strategic planning should be to produce a Plan that is 1) relevant, realistic, and flexible; 2) with a very high likelihood of being implemented; 3) in order to achieve the purpose of the planning, e.g., a purpose to evolve to the next stage of …

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Mistakes Made by Strategic Planning Facilitators

Here’s a list of the biggest mistakes that I have seen made by strategic planning facilitators over the years: 1. Not getting sufficiently trained on how to do facilitating, e.g., planning the meeting, goals, ground rules, which techniques to cultivate complete participation, doing interventions, managing conflict 2. Not learning a variety of strategic planning models, …

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Strategic Thinking in the Age of LinkedIn

LinkedIn founder and triple billionaire Reid Hoffman has two endearing mannerisms that reveal the way he sees–and reasons with–the strategic environment. First, he peppers his statements with the word so. Almost a verbal tic that would grate on a speaking coach like the overuse of the dreaded uh … but he uses it more like …

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Avoid the Silicon Valley Syndrome!

Guest blog from my colleague, Adam Brock, Director of Social Enterprise at Joining Vision and Action (formerly JVA Consulting): How can a well-meaning startup avoid “Silicon Valley Syndrome” and actually use a social startup to create real value for society? Every era has an industry that epitomizes its values. At the turn of the 20th …

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Develop Your Strategic Intuition

The best decision-makers in chaotic “fog of war” conditions seem able to call on intuition – knowing what to do without knowing why or how they know.

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Free Online Program to Learn Strategic Planning Facilitation

Unlock Your Facilitation Skills | Free Strategic Planning Program The Consultants Development Institute is offering a complete, online series to teach how to facilitate strategic planning for any type of organization. The series Facilitating Strategic Planning includes a pro bono Audit Track with unlimited enrollment. In that Audit Track, you get free access to all …

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Moneyball: The Role of the Chief Strategy Officer

Moneyball and the Work of the Strategist Paul DePodesta was recently named the Chief Strategy Officer by the Cleveland Browns of the National Football League. This is significant because, as any fan of Moneyball knows, Mr. DePodesta has spent his career in the sport of baseball, not football. This matters to the community of strategic …

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50 Tips and Tools for Effective Strategic Thinking Skills

To engage in strategic thought, you must think and reflect on the big picture—on the diverse players and forces in your competitive environment. Anticipate the future. Use your right brain for intuition and wisdom, and your left for planning. As Isaac Newton said, “Truth is the offspring of silence and meditation.” Here are 50 tips …

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To Learn Strategy, Know History

When you are faced with the most important and strategic decision of your life, where can you go for wisdom? Can you find insight in a book of history? Facing a world in crisis, John F. Kennedy did just that. Generally, we learn skills by trying something, failing, and trying again until we get it …

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Execution Trumps Strategy

The results are in – Execution trumps strategy. Your business plan may have great strategies, but it will be a great failure if executed poorly. So just hire the right people, right? Turns out the answer is not what you think. At least according to a recent Harvard Business Review Article. Five Myths About Effective …

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Is Balance Possible?

Now here’s a frank perspective: Balance doesn’t work. So don’t even try. Accept the fact that the only way to really make something happen is to go “full out” at it, with everything you have.

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B Corp As A Competitive Edge?

Last week, I attended a celebration for B corps in Colorado. These are for-profit companies certified by a nonprofit called B Lab for achieving social and environmental goals along with business ones. What I noticed differently from other discussions among B Corps in the past, was a stronger focus not only on this vibrant community …

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Jump-start your creativity with Generative Fill and make stunning updates to your images with text prompts within the Photoshop (beta) app on your desktop.

   Try Generative Fill in the Photoshop (beta) app To install the Photoshop (beta) app on your desktop, visit the  Beta apps  tab of your  Creative Cloud desktop app and select  Install  next to  Photoshop (Beta) . 

Generative Fill in Photoshop

Topics in this article:

Tips and tricks while using Generative Fill

Questions we have answers.

Meet Generative Fill — the revolutionary and magical new suite of AI-powered capabilities grounded in your innate creativity, enabling you to add, extend, or remove content from your images non-destructively using simple text prompts. You can achieve realistic results that will surprise, delight, and astound you in seconds. 

We’re building these capabilities in collaboration with our community so that real-time feedback shapes these new experiences. To share your valuable feedback, visit the  Adobe Photoshop beta community .

To explore more about generative AI and find answers to common questions, see  Generative AI FAQ . 

With Generative Fill, you can:

How to use Generative Fill in your image

Before you proceed, ensure you're connected to the internet, as Generation Fill requires cloud processing.

Generate an object

Generate an object using text prompts

Select an area in your image, then describe what you’d like to add.

Make a selection

Use any selection tool in Photoshop to make a selection around a desired object or an area in your image. 

Access Generative Fill

Select the Generative Fill button in the contextual taskbar that appears.


You can also choose Generative Fill from any of the following options:

Add your text prompt

A text-entry prompt box appears in the contextual taskbar where you can describe the object or scene you want to generate in your image in English only, or feel free to leave this blank. If you leave this blank, Photoshop will fill in the selection based on the surroundings.

Currently, the prompts used for the description are supported in English only. For best results, use descriptive nouns and adjectives in text prompts instead of instructive prompts like, “fill the area” or “create a scene".

Generate variations

In the contextual taskbar, once your text prompt is complete, click Generate .

Generate more variations

(Optional) To generate more variations, click Generate again in the Properties panel.

Further, you can modify your text in the prompt box and click Generate to create new variations with the revised text.

You can now view the variations in the Properties panel and click on the thumbnail preview to see the results on your image.

Generate backgrounds

Select the background behind your subject, then generate a new scene from a text prompt. 

Generate backgrounds using text prompts

To do so, choose  Select > Subject , then choose  Select > Inverse . Then follow steps 2-5 from Generate an object section above. 

Extend images

Extend the canvas of your image, then select the empty region and apply Generative Fill . Applying Generative Fill without a prompt will create a seamless extension of your image.

Extend an image using text prompts

Select the Crop tool from the toolbar. Crop borders display on the edges of the photo. 

Drag the corner and edge handles outward to extend your canvas size. 

Press Enter/Return on the keyboard or the commit checkmark in the Crop options bar.  By default, the extra canvas will use your background color.

Use the rectangular Marquee tool to select the extra canvas by clicking and dragging to make the selection. 

Follow steps 2-5 from  Generate an object  section above. 

Leave the text-entry prompt box blank after clicking Generate if you want the selection to be filled based on the surrounding pixels in your image.

Remove objects

Select the object(s) you want to remove, then let the Generative AI technology make it disappear. 

Leave the text-entry prompt box blank after clicking  Generate  if you want the selection to be filled based on the surrounding in your image.

Remove objects from your image using text prompts

Avoid making a tight selection and always overlap some areas around the selection in your image to generate a better resultant image and enable seamless blending.

Benefits of using Generative Fill

Let’s take a look at how Photoshop’s new AI feature will be able to help you in your day-to-day work:

We're excited to continue to build on Generative Fill in the coming months and plan to bring it to most Photoshop customers by the end of the year.

Here are some tips and tricks to help you get the most out of using Generative Fill :

To find answers to Generative AI common questions, see Generative AI FAQ .

What is the Photoshop (beta) app, and where can I find it?

The Photoshop (beta) app enables you to test apps, try new features and functionality, and share your feedback directly with Adobe. Learn more about the Photoshop (beta) app here . 

To install the beta app on your desktop, visit the  Beta apps  tab of your  Creative Cloud app and select  Install  next to  Photoshop (Beta) . 

I'm not seeing the latest updates in the Photoshop (beta) app. What should I do? 

If you don't see an update next to Photoshop (Beta) , you can manually look for the update in your Creative Cloud desktop app by going to the Updates tab and selecting Check for Updates .

Who can access the Photoshop (beta) app?

The Photoshop (beta) app is generally available to Photoshop users.

How do I provide feedback in the Photoshop (beta) app?

In the Photoshop (beta) app you can provide feedback by clicking on the beaker icon in the upper-right corner. You’ll also be able to thumb up, thumb down, or report directly from the contextual taskbar.

Why can’t I access Generative Fill?

Generative Fill in the Photoshop (beta) app is only available to users of at least 18 years of age with a Creative Cloud Individual license along with CC Teams ,  CC Enterprise , and our Educational customers.

For users under 18, Generative Fill is visible but disabled. Also, for   non-RGB 8/16 bits documents, the feature is visible but disabled. Hovering over the Generate button will show a tooltip explaining why the feature is unavailable.

Generative Fill is not available in China at this time.

Why is the Generative Fill button greyed out if I'm over 18?

If you find that Generative Fill is greyed out for you and you're over the age of 18, it is possible that you may not have a valid  Date of Birth associated with your Adobe ID account. To update your Date of Birth , you can do either of the following:

Once your Date of Birth is up to date, relaunch the Photoshop (beta) app to enable  Generative Fill .

Is Generative Fill only available in the Photoshop (beta) app?

Yes, Generative Fill is only available in the Photoshop (beta) app.

How should I use Generative Fill? What can I do with Generative Fill?

Generative Fill is a magical new suite of AI-powered capabilities that enable you to add, extend, or remove content from your images non-destructively, using simple text prompts to achieve realistic results that will surprise, delight, and astound you—in seconds.

What differentiates Generative Fill in Photoshop?

Do I need to be experienced with Photoshop to use Generative Fill ?

Photoshop users of all levels can use Generative Fill . Generative Fill capabilities can be accessed with a simple text prompt to achieve realistic results that will surprise, delight, and astound you—in seconds.

Got a question or an idea?

If you have a question to ask or an idea to share, come and participate in the  Adobe Photoshop community  or Photoshop beta community . We'd love to hear from you.

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Invest Ahead

How to protect your investments in the debt ceiling standoff

Jeanne Sahadi

No one can say yet which day the US Treasury would no longer be able to pay all the bills of the United States in full and on time if lawmakers refuse to raise the debt limit.

That day — the so-called “X-date” — is currently estimated to fall sometime between early June and early August.

Bond market experts still expect lawmakers to strike a deal before the X-date hits, if only at the 11th hour and 59th minute.

“[N]o one in Washington has any incentive to see the US default … [but] no one is also really incentivized to compromise before the actual deadline….. Nevertheless, we remain confident that a deal will happen in time to avoid any sort of breach,” said Libby Cantrill, managing director and head of public policy at PIMCO.

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First on CNN: CEOs warn of 'devastating scenario' if America defaults

But even if that’s the case, between now and then bond investors should expect volatility .

“As long as the discussions are ongoing between the Biden administration and Congress, we’d expect volatility to be relatively elevated,” said Collin Martin, director and fixed income strategist at the Schwab Center for Financial Research.

Bond investors are all about pricing in the risk that they may not be paid back on debt they buy — either on time or at all. Normally, US Treasuries are considered to be the world’s safest assets because they are backed by the full faith and credit of the United States. But the lack of a deal to raise lawmakers’ self-imposed debt ceiling so close to the X-date is introducing unwanted risk into each investor’s calculus.

“We’ve already seen some pricing stress around short-term bills, Treasury bills, and a little bit of change in the… sovereign credit default swap spreads,” said Gary Gensler, chair of the Securities and Exchange Commission, at an event on Monday.

Short-term Treasury bills that mature on June 1 or soon thereafter have seen a spike in yields in the past month, indicating investors want to be paid more for taking on what they perceive to be higher risk that they may not be paid back on time.

That’s an important distinction from assuming they won’t be paid back in full, Martin notes. The assumption is that even if the United States briefly goes past the X-date, it will resolve things quickly and will make good on all the payments it must make. In contrast to corporate debt, the risk is that a bond investor would only be able to recover a portion of their investment. “But with Treasuries, it’s more about ‘When will I get the money back?’” he said.

Right now, yields on one-month T bills are well above the yields for 10-year and 30-year Treasury bonds. For bills maturing on or before May 30, yields have fallen and their prices have risen because investors are willing to pay up to have a near guarantee of prompt repayment, Martin noted.

So what, if anything, should bond investors do now?

Those who have invested in Treasury bills maturing on or right after June 1 and who definitely need their money at that time — for example, to pay their own bills — might consider selling those bills now and reinvesting in bills that mature sooner, Martin suggested.

If you’re invested in bond funds, check to see that the bond portion of your portfolio has adequate exposure to intermediate and longer-term bonds, rather than being too heavily weighted toward short-term higher yielding bonds. With the latter, “you face reinvestment risk down the road when it might be better to lock in rates with certainty now,” he said. Those rates are currently running between 3.5% to 4%.

And to the extent there is any uncertainty about being paid on time by the Treasury, there may be a flight to 10-year Treasury bonds — which means their prices will go up, which can help buffer your portfolio. “They are still the most liquid investment and the safest investment out there,” Martin said.

When it comes to your exposure to bonds other than Treasuries, Martin recommends sticking more heavily with high-quality investments, rather than corporate junk bonds or emerging market bonds. The reason: If the economy turns south — or the unthinkable happens and the United States does default on its debt — those high-risk debt instruments will come under the most pressure.

“If you need to borrow money, you need the confidence of the markets to lend to you,” Martin said. If there is a recession or any concern about the Treasury paying back investors on time, there will be less confidence to go around.

As for your 401(k), Martin said the best thing you can do now is to review your equity-to-bond allocation and make adjustments if necessary. As we move closer to June, stocks are likely to see a lot more volatility because they are inherently riskier assets than bonds.

Considering the longer-term picture for your investments is also the advice from Vanguard, according to spokesperson Jessica Schifalacqua.

“Our general guidance is for investors to maintain a balanced portfolio in keeping with their goals and to remain disciplined. A long-term view is especially important during periods of uncertainty,” she said.

– CNN’s Elisabeth Buchwald contributed to this report

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Netflix launches paid account sharing in the United States: How much it will cost you

The Netflix password-sharing crackdown has officially begun in the United States. 

Just months after enforcing new restrictions in Canada, Spain, Portugal and New Zealand, Netflix is rolling out account-sharing limits in the U.S.

Only people who live under the same roof can share accounts , the streaming company says. So you have two options: transfer your friends and family members mooching off your account to a new membership or share your Netflix account for an additional $8 monthly fee.

“Your Netflix account is for you and the people you live with – your household,” Netflix said in an email to U.S. subscribers.

The monthly fee is less expensive than the basic ad-free plan, which is $10 a month, but more than the ad-supported plan, which is $7 a month. Standard plans cost $15.49 a month and premium plans cost $20 a month.

Who has your Netflix password?  Check who's logging into your Netflix account and boot them

It's not me, it's Netflix: With password sharing on the block, how to boot your friends

Netflix password-sharing rules

The popular streaming service used to encourage sharing Netflix credentials with friends and extended family. But it has changed its tune as subscriber growth slowed amid growing competition and a return to pre-pandemic viewing habits.

Now it’s looking to squeeze a few more bucks out of freeloaders. 

“This is a way of getting folks who watch and enjoy Netflix to also contribute to the future of content ,” Ted Sarandos, the co-CEO of Netflix, told the Toronto Star on April 6. 

Cowen senior research analyst John Blackledge estimates that Netflix could pick up 2.1 million new U.S. subscribers from the initiative. Netflix accounted for 7.3% of total TV viewing in February 2023, according to Nielsen.

Moody's Investors Service says the password-sharing initiative could cause "short-term subscriber discontent and disruption but presents the company with a material revenue growth and margin expansion opportunity."

Wells Fargo Securities says paid password sharing could be a bigger earnings opportunity for Netflix than people signing up for its ad-supported subscription.

Will you pay for a Netflix account?

New Street Research says its survey of paying and nonpaying Netflix users found that more than half – 54% – would pay for their own subscription if their access was yanked, 70% would choose a subscription that is not supported by advertising and 37% would pay extra for people who don't live in their household.​"While only a small sample of the broader population of U.S. Netflix users, we think results bode well for traction of password restrictions," New Street Research said.

Will you cancel Netflix?

There is some risk, however. Netflix lost more than 1 million users in Spain in the first three months of 2023 after cracking down on password sharing in February, according to market research group Kantar.

However, Netflix told investors that after a wave of cancellations, subscribers began adding "extra member" accounts. In Canada, the number of paying subscribers is now higher than before, the company said.

Why is Netflix cracking down on password sharing?

Forty percent of consumers in U.S. internet households share credentials or use shared credentials, up from 27% in 2019, a Parks Associates survey found in 2022.

Some 100 million people watch Netflix using someone else’s account, the company says.

Citi analyst Jason Bazinet estimated that streaming services lose about $25 billion a year. Netflix accounts for about 25% of that lost revenue.

How does Netflix know who is in your household?

Netflix began testing features in Chile, Costa Rica and Peru that would let accounts pay extra to share access with up to two people outside their household in 2022. About one-third of Netflix subscribers live in the U.S. and Canada.

Netflix uses IP addresses, device IDs and account activity from devices signed into an account to determine who shares a household.

When will Netflix stop password sharing?

The gradual rollout of more limited password sharing has sparked a backlash among subscribers elsewhere in the world, especially families with children in college or long-distance couples.

Netflix says it has no choice but to crack down on “unpaid viewing” as subscriber growth slows. While executives say they know the new policy isn’t popular and some people may cancel their accounts, they hope to lure them back with quality programming.

How will Netflix enforce password sharing crackdown?

When the account owner signs in, they will set their primary location. Netflix will then use device and network signals to determine if other account users are part of the household.

Can I use Netflix in two different houses?

If not, those users will be prompted to start their own accounts or be locked out. The account holder can also pay a monthly fee to add another household. 

Netflix says people who’ve been mooching off of other people’s accounts can transfer their viewing history and other settings to a new paid subscription.

Can I watch Netflix when I travel?

You can still watch while you travel on your personal devices or by logging into a new TV at a hotel or Airbnb.

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Politics latest: health secretary 'wants to see boris back' as mp in next parliament; admits delay on new hospitals pledge.

Steve Barclay, the health secretary, spoke to Trevor Phillips on Sky News about the latest allegations against Boris Johnson, the government's record on migration, why a Tory 2019 election promise on new hospitals could fall short and his tough stance on pay for nurses.

Sunday 28 May 2023 16:15, UK

Former prime minister Boris Johnson leaves his home in London, the day after his appearance before the Commons Privileges committee over his denials of No 10 parties during the pandemic. In testimony lasting more than three hours, Mr Johnson insisted there was not a "shred of evidence" to show he lied to MPs. Picture date: Thursday March 23, 2023.

 Key points

The "doorstep".

It's an often necessary but rarely tidy journalistic exercise - locating and asking pertinent questions of an unwilling participant who has gone to some effort to avoid them, writes Sky News US correspondent James Matthews .

Boris Johnson had been on a lengthy US trip, through Texas to Las Vegas in the west and Washington DC in the east.

He had dined with former presidents George W Bush and Donald Trump.

He had given speeches, at least one for a reported six-figure sum, and spoken on a range of issues - Ukraine, in particular.

Mr Johnson had covered some distance and considerable subject matter.

But he hadn't covered COVID, until we caught up with him upon his departure through Dulles Airport in Virginia.

And "doorstepping" the former prime minister wasn't tidy, as he was escorted by aides and security personnel towards a check-in desk, initially reluctant to answer questions.

Read the full analysis here:

By Faye Brown, political reporter

Boris Johnson has insisted fresh claims he broke lockdown rules are "total nonsense" and that elements of his ministerial diary were "cherry-picked and handed to police".

The former prime minister was confronted by Sky News about the allegations as he made his way through the Dulles International Airport in Washington following a brief tour of the US.

Asked if he broke the rules he told Sky's US correspondent James Matthews : "This whole thing is a load of nonsense from beginning to end.

"I think it's ridiculous that elements in my diary should be cherry-picked and handed over to the police, to the privileges committee without even anybody having the basic common sense to ask me what these entries referred to."

Mr Johnson was referred to the police by the Cabinet Office on Wednesday over events in Chequers and Downing Street following a review of his official diary as part of the official COVID inquiry.

Pressed on whether the entries showed him "mingling with friends", Mr Johnson insisted "that is absolutely not what these diary entries show".

Read his comments in full here:

Earlier today, Labour's shadow work and pensions secretary Jonathan Ashworth told Sky News that his party will not shut down existing oil and gas fields (see post at 9.19).

He said that Labour's focus will be on sustainable energy, particularly nuclear and tidal, and said the party will outline its plans further "in the coming weeks".

The Conservative Party has now responded to Mr Ashworth's comments, accusing Labour of strenghthening Russian president Vladimir Putin's use of "energy as a weapon."

Energy Security Secretary Grant Shapps said: "In the midst of high energy prices for families, Labour's ideological vendetta against British energy independence not only risks hundreds of thousands of jobs but strengthens Putin's campaign to use energy as a weapon against the west.

"The Conservatives are taking a pragmatic approach supporting sectors that have enabled us to end our reliance on Russian oil and gas, while investing in the clean technologies we need for the future."

By Tim Baker, political reporter

Health Secretary Steve Barclay held a "constructive" meeting with Royal College of Nursing (RCN) chief Pat Cullen - but made clear that a new pay offer for nurses will not be forthcoming.

Ms Cullen previously recommended the members of her union accept the deal agreed with the government, but it was rejected by members.

However, the offer was imposed because a majority of the NHS Staff Council body wanted to take the deal - despite the opposition from the RCN.

Speaking to Trevor Phillips, who was hosting Sophy Ridge on Sunday on Sky News, Mr Barclay was asked about a recent summit with Ms Cullen.

He said they "had a very constructive meeting this week" - but described what was offered previously and  accepted by the NHS Staff Council  as a "full and final" offer.

Read his full comments here:

Net migration to the UK rose to 606,000 in the 12 months to December 2022, the highest number for a calendar year on record - despite a Tory 2019 manifesto commitment to "bring overall numbers down".

The figures, published by the Office for National Statistics, show that most people arriving to the UK last year were non-EU nationals.

The body attributed a "unique year" for migration to "world events" including the war in Ukraine and unrest in Hong Kong.

On the Sky News Daily, Niall Paterson breaks down the numbers with Sky's data and forensics correspondent Tom Cheshire and picks through the fallout in Westminster with political correspondent Ali Fortescue .

Plus, Madeleine Sumption, director of the Migration Observatory at Oxford University, explains how what the government says actually impacts the number of people that come to the UK.

Click to subscribe to the Sky News Daily wherever you get your podcasts

 Every week there are stories in the newspapers about resignation honours supposedly expected imminently, but yet to materialise.

If you're unfamiliar, resignation honours refers to the tradition of an outgoing prime minister granting a peerage, knighthood, or other kind of honour to a number of people.

The appointments are vetted by the House of Lords Appointments Commission, as well as the Cabinet Office.

Both Boris Johnson and (controversially) Liz Truss have drawn up individual lists, and they could be published by the government at any time.

So what do we know about those lists, and when could they be published?

Boris Johnson's resignation honours

After his departure from office in September, it was reported that Boris Johnson had drawn up a list of 50 people to receive peerages.

It has previously been reported that three sitting Tory MPs are on the list - former culture secretary Nadine Dorries, former cabinet office minister Nigel Adams, and COP26 president Sir Alok Sharma.

Those appointments could cause a giant unwanted headache for Rishi Sunak, because one cannot sit in both the House of Commons and the House of Lords at the same time.

It has been reported that they will not be allowed to defer their peerages until after the next general election, when they are all set to stand down, meaning that it could lead to three by-elections that the current prime minister will be in no mood to fight (and potentially lose) as he tries to resuscitate his party's position in the polls.

In today's Sunday Times, it is reported that the Conservative Tees Valley mayor Ben Houchen could also be named on the list.

The paper also reports that the vetting of Mr Johnson's list has finished, and Rishi Sunak is due to have a phone call with his predecessor this week that Mr Johnson wants to be about peerages, but Mr Sunak wants to avoid.

So, when we get to see the list is very much up in the air, but it is another headache on the horizon for the prime minister.

Liz Truss' resignation honours

Having been prime minister for just 49 days, Liz Truss having drawn up an honours list is certainly controversial.

Nonetheless, she has reportedly selected around 12 people to be honoured, said to include Tory party donor Jon Moynihan, aide Ruth Porter, ex-Vote Leave's Matthew Elliott and think tank boss Mark Littlewood.

Mr Littlewood is director of the Institute of Economic Affairs, a free-market supporting think tank strongly associated with Ms Truss and her economic philosophy.

Mr Elliott helped found the low-tax think tank the Taxpayers Alliance group and was chief executive of the main pro-Brexit campaign during the 2016 referendum.

Ms Porter ran Ms Truss' Tory election leadership campaign and briefly served as her deputy chief of staff in Number 10.

And Mr Moynihan donated tens of thousands of pounds to Ms Truss' leadership campaign, according to the register of MPs' financial interests.

When the list will be announced is unclear, but although Ms Truss granting peerages is controversial, it will likely see a shorter backlash for Mr Sunak than Mr Johnson's list due to the lack of sitting MPs.

Plans to encourage supermarkets to introduce voluntary price caps on food staples in a bid to help with the cost of living crisis are being drawn up by Downing Street, according to reports.

The scheme would aim to get retailers charging the lowest possible amount for some basic products like milk and bread, the Sunday Telegraph reported.

A government source told Sky News that any scheme "would be voluntary", adding: "Government has no plans to cap the price of food.

"We recognise retailers operate on low margins. But we are acutely aware of the cost of living squeeze people feel."

A Treasury source told the Sunday Telegraph: "Food inflation is much more resilient and difficult to get rid of than we anticipated."

Supermarkets are expected to be allowed to select which items they would cap and only take part in the initiative, modelled on similar agreement in France, on a voluntary basis, the paper reported.

It comes after Chancellor Jeremy Hunt backed interest rate hikes, even if they risk of plunging the UK into recession, in order to combat soaring inflation.

Although down from 10.1%, the Consumer Prices Index of inflation remains high at 8.7%, while experts have warned that alarmingly expensive food is set to overtake energy bills as the "epicentre" of the cost of living crisis.

Food prices are expected to keep rising, having already increased by 19.1% in the year to March, placing additional pressure on families.

Surging support for Labour among rural voters could put some cabinet ministers at risk of losing their seats at the next general election, a new poll has suggested.

The survey, conducted by Survation on behalf of the Country Land and Business Association (CLA), found that support for Sir Keir's Starmer's Labour Party has risen by 16 points since 2019 in the 100 most rural constituencies, with the party trailing just five points behind the Tories.

This would suggest that more than 20 Conservatives in the "rural wall" could be in line to lose their seats to opposition parties - including Chancellor Jeremy Hunt, whose constituency is being split in half at the next election.

Also at risk are:

Although all four have majorities of around 15,000, bigger majorities in rural seats have been overturned of late.

Mark Tufnell, president of the CLA, blamed "outdated" planning restrictions, a lack of infrastructure and the cost of living for the fall in support for the Tories, but suggested rural seats were still up for grabs.

The poll found 34% of people thought the Tories did not understand rural communities, while 31% said the same about Labour and 23% about the Liberal Democrats.

He said: "I think we have seen that any party, whether it’s Labour, the Liberal Democrats or the Conservatives, that wants to show an understanding of the countryside could easily hold and win those seats."

Saying that he expected the next election to be "tightly fought", Mr Tufnell added that the 12 million rural voters “could end up controlling who wins the general election".

Civil servants working for the Driver and Vehicle Licencing Agency (DVLA) have announced 15 days of strike action in an ongoing protest over pay.

Members of the Public and Commercial Services (PCS) union who work for Output Services Group at TY Felin and Morriston in Swansea will walk out from 11-25 June.

These staff print materials from the DVLA, among other government departments, meaning that there will be backlogs for things like driving licences and tachographs, and no vehicle tax reminders will be printed.

This group went on strike in February, and the print machines were switched off with no one else to operate them.

In a statement, PCS general secretary Mark Serwotka said: "Managers struggled last time and they’ll struggle this time.

"We’re not afraid to turn up the pressure on ministers to achieve our reasonable demands – a fair pay rise to help our members through the cost-of-living crisis and beyond."

A DVLA spokesperson said: "The quickest and easiest way way to deal with DVLA is through our online services which, along with our Contact Centre, is operating as normal during this period of industrial action."

As you might expect, the Tories have not exactly praised Labour's proposals for immigration reform (more details in the post at 12.00).

In a rather punchy statement, Tory chairman Greg Hands said: "This morning Labour once again showed us they are all over the place on immigration.

"The fact is that lefty lawyer Keir Starmer put freedom of movement as one of his key leadership pledges and previously said all immigration controls are racist.

"The Conservatives have implemented a points-based system and reformed student visas, giving us the tools to control numbers as we deliver on our five priorities."

It should be noted that net migration hit a new calendar year record of 606,000 people in the year to December 2022.

For more, Sky's data and forensics correspondent Tom Chesire examines net migration in detail...

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