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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:

• A market analysis : gathering information about factors and conditions that affect your industry
• Competitive analysis : evaluating the strengths and weaknesses of your competitors
• Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
• Marketing: using your research to advertise your business
• Logistics and operations plans : planning and executing the most efficient production process
• Cash flow projection : being prepared for how much money is going into and out of your business
• An overall path to long-term growth

What is the purpose of a business plan?

A business plan is like a map for small business owners, showing them where to go and how to get there. Its main purposes are to help you avoid risks, keep everyone on the same page, plan finances, check if your business idea is good, make operations smoother, and adapt to changes. It's a way for small business owners to plan, communicate, and stay on track toward their goals.

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.

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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:

• No market need : No one wants what you’re selling.
• Lack of capital : Cash flow issues or businesses simply run out of money.
• Inadequate team : This underscores the importance of hiring the right people to help you run your business.
• Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
• Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

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 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.

Business plan FAQs

How does having a business plan help small business owners make better decisions.

Having a business plan supports small business owners in making smarter decisions by providing a structured framework to assess all parts of their businesses. It helps you foresee potential challenges, identify opportunities, and set clear objectives. Business plans help you make decisions across the board, including market strategies, financial management, resource allocation, and growth planning.

What industry-specific issues can business plans help tackle?

Business plans can address industry-specific challenges like regulatory compliance, technological advancements, market trends, and competitive landscape. For instance, in highly regulated industries like healthcare or finance, a comprehensive business plan can outline compliance measures and risk management strategies.

How can small business owners use their business plans to pitch investors or apply for loans?

In addition to attracting investors and securing financing, small business owners can leverage their business plans during pitches or loan applications by focusing on key elements that resonate with potential stakeholders. This includes highlighting market analysis, competitive advantages, revenue projections, and scalability plans. Presenting a well-researched and data-driven business plan demonstrates credibility and makes investors or lenders feel confident about your business’s potential health and growth.

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.

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.

14 Reasons Why You Need a Business Plan

10 min. read

Updated May 10, 2024

There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.

A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.

A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.

Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?

Good questions. Here’s every reason why you need a business plan.

• 1. Business planning is proven to help you grow 30 percent faster

Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The  process  of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed. 

You don’t have to just take our word for it. Studies have  proven that companies that plan  and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience  cash flow crises  that threaten to close them down. 

• 2. Planning is a necessary part of the fundraising process

One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.

Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture. 

A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality. 

Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money. 

• 3. Having a business plan minimizes your risk

When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations. 

As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can  do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans. 

Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.

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• 4. Crafts a roadmap to achieve important milestones

A business plan is like a roadmap for your business. It helps you set, track and reach business milestones. 

For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.

In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.

And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.

• 5. A plan helps you figure out if your idea can become a business

To turn your idea into reality, you need to accurately assess the feasibility of your business idea.

You need to verify:

• If there is a market for your product or service
• Who your target audience is
• How you will gain an edge over the current competition
• If your business can run profitably

A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.

Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.

6. You’ll make big spending decisions with confidence

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase. 

These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.

7. You’re more likely to catch critical cash flow challenges early

The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your  cash flow statement  is one of the three key financial statements you’ll put together for your business plan. (The other two are your  balance sheet  and your  income statement  (P&L). 

Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills. 

• 8. Position your brand against the competition

Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:

• What is your competition doing well? What are they doing poorly?
• What can you do to set yourself apart?
• What can you learn from them?
• How can you make your business stand out?
• What key business areas can you outcompete?
• How can you identify your target market?

Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete. 

• 9. Determines financial needs and revenue models

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind. 

Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business. 

Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.

• 10. Helps you think through your marketing strategy

A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers. 

Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc. 

Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.

• 11. Clarifies your vision and ensures everyone is on the same page

In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there. 

Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.

• 12. Future-proof your business

A business plan helps you to evaluate your current situation and make realistic projections for the future.

This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.

Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.

By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.

You’ll also be in a better position to seize opportunities as they arise.

Further Reading: 5 fundamental principles of business planning

• 13. Tracks your progress and measures success

An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.

By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.  

Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.

• 14. Your business plan is an asset if you ever want to sell

Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

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• Writing your business plan

By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one. 

Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools and business plan templates out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• 6. You’ll make big spending decisions with confidence
• 7. You’re more likely to catch critical cash flow challenges early

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15 Reasons Why You Need a Business Plan in 2024

Posted august 5, 2024 by noah parsons.

Imagine you’re going on a road trip. You know your final destination, but you haven’t figured out how to get there. 

While it might be fun to start driving and figure things out as you go, your trip will likely take longer than expected and end up costing more. But, if you take the time to 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 much different, which is why a business plan is so important to your continued success.

What is the purpose of a business plan? 

The primary purpose of a business plan is to help you figure out where you want to go with your business and how you will get there. Writing a business plan 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.

15 reasons why you need a business plan

“Creating a road map for my business is all well and good, but do I really need a business plan? I’d rather just get started.”

If you’re still thinking like this and decide to skip writing a business plan, you’re making a big mistake and setting yourself up to fail. Even if your business survives, without a plan, you’ll miss valuable growth opportunities and never truly be in control.

Still not convinced? Here are the critical reasons why a business plan is important for small businesses. 

1. You’re more likely to start

Documenting your business idea makes it more official. It takes rough ideas and turns them into the making of a real business. 

According to a study by the Harvard Business Review , entrepreneurs who write formal plans are 16% more likely to achieve viability than those who don’t.

Even if it’s just notes about your potential business, writing things down will make you more likely to proceed with your business. Without a plan, you can’t prove to yourself, partners, mentors, or investors that you’re serious about starting.

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2. Reduce potential risks

Writing a business plan takes some of the risk out of starting a business. It helps you think 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?

Your business plan can answer these startup questions .

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?
• Will you 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 growth questions and mitigate risk.

3. Test a new business idea and prove it’s viable

When you have a new business idea, it helps to spend time thinking through all the details. 

A business plan will help you think about your:

• Target market
• How much money you’ll need to launch
• 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. 

There’s no need to create a detailed business plan either. 

Instead, I recommend using a one-page business plan to quickly test your ideas and determine if you have a viable business. 

4. 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 will get the word out to them. 

That’s where a marketing plan comes in. It can be an indispensable tool to figure out how you get your first customers as well as your thousandth customer. It can start as a simple bulleted list of potential marketing channels that expands in detail as you need it.

5. Build a better budget and a financial forecast

Without a business plan, it’s impossible to know how much money it will cost to start and run a business. You don’t just need money for your initial purchases; you need enough cash in the bank to maintain your cash runway and keep your business afloat while you get fully up and running.

When you plan, you’ll need to create your expense budget , set sales goals, and identify how much cash is needed to keep your doors open, purchase inventory, and more. 

The beauty of incorporating forecasts into your business plan is that you don’t need 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 revisit your business plan and update your forecasts to generate a more accurate picture of your business’s future.

6. Attract investors and get funding

Sharing your business idea with investors requires a 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 pitch your business to investors, having a business plan 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.

7. Plan for different scenarios

Things rarely actually go to plan. The world is always changing, customer tastes change, and new competitors arrive. 

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.

Without a business plan, you’ll be reacting blindly with no way to track if your decisions are making a real impact.

8. 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 prospective employees understand your business strategy and growth plans 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 hire more employees . 

9. Get your team on the same page

A great business strategy 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 and working towards the same goals. 

It’s even better if you regularly review your plan with members of your team. Have everyone revisit your core strategy, analyze it, and explore how it impacts individual and team goals .

10. 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 business plan to manage your business, you’ll see which parts of your strategy are working and which 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 adjust your strategy, pivoting to new opportunities that will drive profitability.

Regular business plan reviews , ideally monthly, will help you build a strong, resilient business.

11. 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 by leveraging your business plan, you can be prepared to face each crisis head-on.

A plan helps you assess your current situation, determine how the crisis will alter your plan, and explore what it will take to recover. 

With a little planning, you can even prepare your business for future downturns with this same process. Having the right plan and processes in place will make crisis planning easier and, ideally, recession-proof your business .

12. You’ll be ready to sell

You might decide to sell your business or position yourself for acquisition down the road. Having a solid business plan helps make the case for a higher valuation. 

Your business is likely worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

Remember, if you were buying a business , you’d likely want to see their business plan and any previous documentation. So, the more organized and professional your plan is, the easier it will be for a buyer to say yes.

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 by writing a simple business plan you can complete in about half an hour. With the emergence of AI business plan generators , getting stuck with a blank page is a thing of the past. Just be sure that you don’t just let AI write your plan for you and keep yourself involved in the planning process.

From there, refine your plan until your idea is solid. At that point, you can invest 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 works, and you’ve considered different financial scenarios so you can handle the unexpected. 

Plus, you have a management tool to run your business better than your competitors. 

15. Research shows that business plans 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 who have or are working on a plan feel confident in their business, even amidst a crisis. 

A study in Small Business Economics found that entrepreneurs who write business plans for their ideas are 152% more likely to actually start their businesses.

There’s plenty of additional research linking business planning with success, so it’s a proven fact that you won’t waste time when you write your plan.

Why is a business plan important? Because it sets you up for success

There are plenty of reasons to write a business plan, but they all relate to one thing—increasing the likelihood of 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. 

If you’ve been putting off writing a business plan, now is the time to do it. Start by downloading one of the many free business plan templates out there, or for additional guidance, invest in an online business plan builder .

No matter what business planning tool you choose, just deciding to write a business plan will set you up to build, run, and grow your business. So, don’t wait—start planning today.

What is a business plan?

A business plan is a structured document that outlines the goals, strategies, target market, and financial forecasts of a business. It serves as a roadmap for the business, detailing the steps necessary to achieve success.

Why is planning necessary?

Business planning is essential because it helps businesses set clear goals, allocate resources efficiently, identify potential challenges, and develop strategies to overcome them. It also provides a framework for decision-making and helps attract investors by demonstrating the viability of the business.

What happens if a business doesn’t plan?

Without planning, a business may lack direction and clarity, leading to inefficient use of resources, missed opportunities, and an inability to respond effectively to market changes. This can result in financial difficulties, operational challenges, and ultimately, business failure.

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Noah Parsons

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12 Reasons You Need a Business Plan In the new book "Write Your Own Business Plan," business expert Eric Butow breaks down how a solid business plan can save your startup during those tough early days.

By Dan Bova Sep 19, 2023

Running a business can be unpredictable, which is why having a solid business plan as a foundation is vital to surviving and thriving in the early days of your startup. Eric Butow, CEO of online marketing ROI improvement firm Butow Communications Group, has teamed up with Entrepreneur Media to write the second edition of our best-selling book Write Your Business Plan , providing you with a roadmap for success.

In the following excerpt, Butow explains how a well-thought-out plan can power your startup and help your vision come to life.

Business plans could be considered cheap insurance. Just as many people don't buy fire insurance on their homes and rely on good fortune to protect their investments, many successful business owners do not rely on written business plans but trust their own instincts. However, your business plan is more than insurance. It reflects your ideas, intuitions, instincts, and insights about your business and its future—and provides the cheap insurance of testing them out before you are committed to a course of action. There are so many reasons to create a business plan, and chances are that more than one of the following will apply to your business.

1. A plan helps you set specific objectives for managers.

Good management requires setting specific objectives and then tracking and following up. As your business grows, you want to organize, plan, and communicate your business priorities better to your team and to you. Writing a plan gets everything clear in your head before you talk about it with your team.

2. You can share your strategy, priorities, and plans with your spouse or partner.

People in your personal life intersect with your business life, so shouldn't they know what's supposed to be happening?

Order Write Your Own Business Plan Now and Get 1 Month of Free Access to Business Planning Software Liveplan Premium

• Easy step-by-step business plan generator
• Built-in financial c alculators
• 500+ sample plans and templates

3. Use the plan to explain your displacement.

A short definition of displacement is, "Whatever you do is something else you don't do." Your plan will explain why you're doing what you've decided to do in your business.

4. A plan helps you figure out whether or not to rent or buy new space.

Do your growth prospects and plans justify taking on an increased fixed cost of new space?

5. You can explain your strategy for hiring new people.

How will new people help your business grow and prosper? What exactly are they going to do?

6. A plan helps you decide whether or not to bring on new assets.

How many new assets do you need, and will you buy or lease them? Use your business plan to help decide what's going to happen in the long term and how long important purchases, such as computer equipment, will last in your plan.

7. Share your plan with your team.

Explain the business objectives in your plan with your leadership team, employees, and new hires. What's more, make selected portions of your plan part of your new employee training.

8. Share parts of your plan with new allies to bring them aboard.

Use your plan to set targets for new alliances with complementary businesses and also disclose selected portions of your plan with those businesses as you negotiate an alliance.

9. Use your plan when you deal with professionals.

Share selected parts of your plan with your attorneys and accountants, as well as consultants if necessary.

Write Your Own Business Plan is available now at Entrepreneur Bookstore | Barnes & Noble | Amazon

10. Have all the information in your plan when you're ready to sell.

Sell your business when it's time to put it on the market so you can help buyers understand what you have, what it's worth, and why they want it.

11. A plan helps you set the valuation of the business.

Valuation means how much your business is worth, and it applies to formal transactions related to divorce, inheritance, estate planning, and tax issues. 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 it's doing (or will do) certain things, why those things are being done, how much that work will cost, and the benefits that work will produce.

12. You can use information in the plan when you need cash.

Seek investment for a business no matter what stage of growth the business finds itself in. 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.

To dig deeper, buy Write Your Own Business Plan and get 1 month of free access to business planning software Liveplan Premium.

Entrepreneur Staff

VP of Special Projects

Dan Bova is the VP of Special Projects at Entrepreneur.com. He previously worked at Jimmy Kimmel Live, Maxim, and Spy magazine. His latest books for kids  include  This Day in History , Car and Driver's Trivia Zone ,  Road & Track Crew's Big & Fast Cars , The Big Little Book of Awesome Stuff , and  Wendell the Werewolf . 

Read his humor column This Should Be Fun  if you want to feel better about yourself.

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Top rated quizizz alternatives, quizizz reviews & product details, quizizz overview.

Quizizz gamifies learning content, making it more engaging and immersive. Learning with Quizizz can significantly improve business outcomes and reduce employee ramp-up time. Creating or importing content into Quizizz takes only minutes, thanks to AI. With Quizizz, you can engage your team in live sessions or remote learning. Trainers receive instant feedback, which can be used to further improve the content.

Quizizz is an interactive learning platform that lets you create engaging quizzes, polls, and presentations that can be accessed by participants anywhere and on any device. Choose between presenter-led and self-learning experiences for your audience. Dazzle the audience with live leaderboards and performance data. Quizizz is used by more than 20 million people per month for employee training, orientation and onboarding, customer engagement, eLearning and teaching, in schools, homes, and offices around the world. No installations or unnecessary downloads required. You don’t need a credit card to sign up.

Quizizz is a learning platform that uses gamified quizzes to help people learn or teach anything, on any device, in-person or remotely. Quizizz is used by more than 70 million people per month in schools, homes, and offices around the world.

Our platform is used in classrooms in over 100 countries across the globe, and in over 80% of US schools. We help educators and training professionals conduct quick assessments on any topic, and analyze results instantly—no grading necessary.

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Quizizz Pros and Cons

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They continuously upgrade their features. I love how they provide multiple quiz assessment types. The multiple attempts and pool of questions gives an edge to other competitors because I can easily integrate to LMS. Review collected by and hosted on G2.com.

It gets lagged when there are so many active users during live stream. Maybe, improved the users capacity when doing live stream assessments so that they will be included in our records. Review collected by and hosted on G2.com.

I always wanted an assessment that provides different types of questioning style. Through this I was able to provide authentic assessment and I became more productive because I can deploy assessments on scheduled plus the fact that they get to have different questions. Review collected by and hosted on G2.com.

Quizizz is so much fun to play and allows educators like myself to assess for the understanding of content when students are fully engaged and fully invested in getting the correct answers. I love that I can take a grade on each assessment and put it in the grade book or use the results of a quiz to reteach material! Review collected by and hosted on G2.com.

It is difficult to think of anything I dislike about this product. I will say that incorporating more diversity in the game experience concerning the music and the available visuals would be great! Also, adding characters to make it more of a traditional video game feel would make for a more interactive experience. Review collected by and hosted on G2.com.

Quizizz enables educators to receive real-time results that aid in the teaching process. Facilitating these quizzes are super easy, and teachers are given less to grade on top of that! Review collected by and hosted on G2.com.

Ability to design own quiz and play with different people. Nice site design. Review collected by and hosted on G2.com.

Many premium features; sometimes sharing link with kids didn't work for me, not clear enough how to use some features. Review collected by and hosted on G2.com.

Helps me make short test and have fun with kids. Review collected by and hosted on G2.com.

It is engaging, especially when it comes to learning, as I have a very short attention span. I also like that it utilizes RPG aspects to make it more fun for the users Review collected by and hosted on G2.com.

So Far I haven't been able to pinpoint anything that I dislike about Quizizz Review collected by and hosted on G2.com.

It is helping me be more engaged in learning topics from different subjects, especially those that are lackluster and boring for my liking. It also helps for friendly competition amongst peers to see who is better that who so that we may help each other grow Review collected by and hosted on G2.com.

Quizizz allows me to create multiple learning moments during sessions and homework activities.

The use of the platform helps to enrigh my session and the learners become more involved and engaged.

A must have in any learning journey.

assessment, knowledge check or fun quizzes for all moments of the class.

The LIVE quizzes are the best!!! Review collected by and hosted on G2.com.

NOthing negative to report as my 2years experience proved to be fantastic. Review collected by and hosted on G2.com.

Providing new interactive ways to teach and learn.

The benefits on the trainings have been immense and improved student satisfaction. Review collected by and hosted on G2.com.

The most helpful thing about Quizzizz is that everything is in one place. I can assess student learning as well as gain instant feedback on how they are doing. My students have much more fun taking assessments on Quizziz than normal pencil and paper quizzes. Review collected by and hosted on G2.com.

There is nothing I dislike about Quizzizz. My favorite part of the software platform is that there are so many premade quizzes that I can use in the classroom and elsewhere. Review collected by and hosted on G2.com.

Quizzizz helps me assess student learning quickly, easily, and in a fun manner. Students actually enjoy taking assessments on Quizzizz instead of on paper. I also get instant feedback on how they perform. Review collected by and hosted on G2.com.

I love the features of how you can print or use it online. I love the data you collect on each player. The kids love how easy it is. I use it as my primary source of testing this year. Students take it once for practice and then again in class for a grade. They love the power ups and surprisingly they like to learn the answers if they get it wrong. It has replaced re-takes in my class and is much more engaging. I love Quizizz and recommend it to my colleagues often! Review collected by and hosted on G2.com.

Nothing because I can use the data for so many purposes as well as engage the students. Review collected by and hosted on G2.com.

I like the added feature of choosing how many times a student can quiz. Review collected by and hosted on G2.com.

Being able to connect with Google Classroom classes & individual students, and quickly get reports back on student progress. I like redemptions. I like the ability to set how many times a student can play Review collected by and hosted on G2.com.

New features (just started this fall) that are merely another way of doing the same thing that other programs already provide. If Google Suite of services already provides us with Sheets, Docs, Drawings, Slides, etc., then it doesn't make sense for me to take the time to learn a new feature that does the same thing. "If it ain't broke, don't fix it."

I like that my students can't see what a correct answer is if they miss a question, but I would like for the conclusion of a game to include an obvious "here's what you missed, summary", so they can study their wrong answers before they make a second attempt. Perhaps such a summary could be added and include a button that the student has confirmed that they have reviewed what questions they missed. Review collected by and hosted on G2.com.

Get it & use it. Review collected by and hosted on G2.com.

My business is not about money, but about education. My problems involve tricking students into learning something. Quizizz provides a tool for me to painlessly engage students that involves their beloved phone technology. If they can complete an assignment on their phones, then they'll probably do it. They know that they'll probably get a little entertainment and excitement out of their Quizizz assignment and they like the competitiveness of it. They like it. If they like it, then I'll get more participation and hopefully more learning. Review collected by and hosted on G2.com.

Nothing. It's just yet another Kahoot ripoff that does not do the job better. Review collected by and hosted on G2.com.

It's too distracting. There are bad memes after a lot of the questions which slow you down and there are powerups which seem to be the focus but really it degrades the quality of the platform. You can't even go back and change your answers. Review collected by and hosted on G2.com.

Don't even think about it. Review collected by and hosted on G2.com.

My school decided to use it for the technology test but in the end it didn't work as intended. Using this kind of platform for a test is not great because you can't check any answers. I would prefer pen and paper or even a service like Blooket (gamified quiz platform in which you can change your answers) to ever using this again. Review collected by and hosted on G2.com.

Quizizz allows for in-class or individual content review in a fun and engaging environment. The ability to assign quizzes for adaptive and spaced learning is on par for optimum learning psychology. My students enjoy the opportunity to gauge their learning in a gamified testing environment, allowing for power-ups and redemption questions, whereas the teacher is provided with robust data from the learner interactions. I also enjoy the fact that the cost structure is an annual minimal single cost to the instructor. The platform also allows for the generation of an embed code to directly place the quiz into an LMS page. Review collected by and hosted on G2.com.

The only item that I see as an issue is the LMS integration policy. In order to have integration, the company only allows for the integration of an enterprise (University or School System) license. This means that the instructor must manually transfer grades into the LMS if they are being tracked. Review collected by and hosted on G2.com.

I utilize quizzes as low- or no-stakes knowledge assessments and embed them directly into my LMS pages. The students enjoy the fact that they can check for understanding to help reinforce the material without penalty. With these assessments, I am provided with a robust set of data that can be utilized for just-in-time teaching to reinforce identified weaknesses. Review collected by and hosted on G2.com.

Quizizz provides a more advanced or challenging platform that some of its competitors. The incorporation of fill in the blank questions alone was worth the wait. The ability to store large numbers of question sets gives you some variety in future years. The easy editing means that you can update quiz sets here in the face of a new textbook. ***One unsolicited tip from the Old Guy: use chapter numbers --including 01 to 09 for the early chapters, at the front of the titles for your quiz sets. That way when you sort alphabetically, everything for Chapter/Unit/Module 3 will be together in your list,(03 Homesteaders, O3 Cattle Ranchers, 03 Buffalo Soldiers, 03...etc) and save you search time. Review collected by and hosted on G2.com.

Something needs to be done to make it easier for TEACHERS to edit student names. I still recall the trouble I had during the 'Year of the Seven Brittany"s. Seven of 140+ with the same first name, most unwilling to use a last name. If I could edited(added) last names, I could have saved a fortune on Tums..... Review collected by and hosted on G2.com.

REALLY emphasize students to log in with full names, or be prepared to lose time trying to figure out WHICH ONE of the Seven Brittanys turned her work. Review collected by and hosted on G2.com.

Quizizz is great for review work, for checking that reading assignments actually get read. As long as you can account for some fill in answer variation, the time saved on grading is incredible. Review collected by and hosted on G2.com.

One of the best features of QUIZIZZ is how easy it is for me to share the QUIZIZZ that I create with my colleagues. It really is as simple as a click of a button. Another feature that I truly love is how I can EMAIL the results to the students' parents! AND how I can easily create a spreadsheet of the results as well!!! Review collected by and hosted on G2.com.

The only thing that I've disliked so far is that we have to pay to record our voices. A lot of my students required for the questions and answer choices to be read to them. It is a shame that this feature isn't free. Review collected by and hosted on G2.com.

QUIZIZZ is a fun and engaging way to have my students participate in class during this new distance learning method that all of us are now in. One of the benefits of this program is how easily it integrated with my Google Classroom. Review collected by and hosted on G2.com.

I love that I have full control over designing the games. In other resources, I have to deal with character limits and can't change the fonts. Because I can write as much as I want in Quizizz and change the fonts or add special characters, my students are able to work on everything from grammar questions to paragraphs to math problems. Review collected by and hosted on G2.com.

I wish that there was more that could be done with the coins students earn, it would be great if they could buy new account icons or backgrounds with the coins they earn or buy new memes for the games. Review collected by and hosted on G2.com.

If you have competitive students who love a game-based format, Quizizz is great for the classroom. My students will often play through the same game, reviewing the information I want them to learn, over and over to kick their classmates off the leaderboard. One of my student's records for gameplay was fifteen times so their name was the only one in the top 10 spots. Review collected by and hosted on G2.com.

I use Quizizz religiously with my grammar lessons and my Title lessons. The fun repetition helps the student remember the material and gives them unlimited chances to practice before I end the game. It's great for students to practice before tests as well. Review collected by and hosted on G2.com.

I love that I can search any topic/subject and allow my students to simply practice or use it as an assessment! I also like that I can access and view reports to see how my students did on their quizizz! It tells me how long they spent on each question, which questions they missed, and which questions they got correct! Not even a paper test can tell you how long each student spent on each question! Review collected by and hosted on G2.com.

To be honest, I haven’t found one thing I dislike about quizizz.com. Review collected by and hosted on G2.com.

Save time, energy, and paper all while making your of grading a super speedy task!!! Absolutely wonderful program! Review collected by and hosted on G2.com.

It has helped me to understand why some students miss certain questions. For example, if it’s a comprehension story question and they answered it in 22 seconds, I know they simply guessed and did not read it.

If I see that a student had to spend 2-3 minutes on certain multiplication facts, then I know which facts they need to work on more.

These are only a few of the wonderful things that quizizz has helped me to understand. I could make a list that goes on and on! Review collected by and hosted on G2.com.

I have been using quizizz for several years now. They have done a real great job of keeping it fresh and updated. My students love to compete solo and in teams. They love the funny names they can receive. As a teacher it is an amazing resource to use as a quick formative check of my students knowledge. I use google classroom and it integrates with quizizz seamlessly. Making it easy and fast for my students to log into a quiz. The homework feature is a great way for my students to practice over and over again.

I have been using quizizz for several years now. They have done a real great job of keeping it fresh and updated. My students love to compete solo and in teams. They love the funny names they can receive. As a teacher it is an amazing resource to use as a quick formative check of my students knowledge. I use google classroom and it integrates with quizizz seamlessly. Making it easy and fast for my students to log into a quiz. The homework feature is a great way for my students to practice over and over again. Review collected by and hosted on G2.com.

I would like to see the lesson module to include a way to stop a video and ask question such as you would find in nearpod or edpuzzle. Review collected by and hosted on G2.com.

As mentioned above it is a great way to store formative quick assessments for early morning bell work. A real time saver year to year. Review collected by and hosted on G2.com.

Self-paced whole group quizizz works great for a warm-up. Kids come into the room, sit down, and are eager to compete.

Instructor-paced is better than Kahoot because questions and answer choices can be longer, up to five answer choices can be used, and pictures can be used more easily.

Being able to assign activities as homework is an added bonus!

These tools also worked really well from the virtual setting. My warm-up procedure didn't have to change. Review collected by and hosted on G2.com.

The "Classic" "Live Quiz" feature requires a student log in before I can start the quiz. That means I have to hover by my computer and press go as soon as the first student logs in. I want to see the live progress and leader board right away.

I also don't like that the Live quiz automatically stops

I know that "Instructor paced" is still in beta. It works well, but the timer length cannot currently be changed. Review collected by and hosted on G2.com.

The automatically generated and saved reports give me the opportunity to give points to the assignment or check to see if a student has been participating (if a parent asks or data is needed). I can maintain physical distance and still check student work. Students are engaged in class. Review collected by and hosted on G2.com.

I love how students can go at their own pace, and I can set questions and answer choices to randomize. My students love the power ups to earn more points and get lifelines to answer questions. There’s a leaderboard that fosters competition, but when students want to see what they missed, they can see their missed questions at the end. As a teacher who doesn’t like to reinvent the wheel, you can also transport questions from other users so you’re not spending as much time writing questions. Review collected by and hosted on G2.com.

The only issue I have with Quizizz is that I tell students to use their last name as their player ID so I can alphabetize for easy grade input. As a Google school, we have a lot of students who just use their Google log in instead. But Quizizz doesn’t recognize their last name with their Google account, so that’s a bit annoying. Review collected by and hosted on G2.com.

I’m solving students’ needs for frequent feedback on their learning. I’ve realized that they have time to reflect and review what they’ve missed individually and we have time as a class to review commonly missed answers as a group so I can reteach and go over things we may have missed. Review collected by and hosted on G2.com.

My favorite thing about Quizzez is that there is an option to create your own quiz for students or to use one of the thousands of teacher-created quizzes already in the app. I have been impressed with the quality of the quizzes already available, which makes for a great last-minute engaging activity for my students. Review collected by and hosted on G2.com.

Something I dislike about Quizzez is that it can be difficult for my younger students to get a hang of the platform. Some students catch on quite quicky, while others require a but of support on my end to help them navigate and access their materials that I assign to them. Review collected by and hosted on G2.com.

A problem that I am solving with Quizizz is that it saves me time creating materials that help check for understanding of my students; many quizzes are already available for me to use and are quite good. A benefit that I am realizing is that I can personally assign each student in my class separate quizzes to meet their individual needs. Review collected by and hosted on G2.com.

I love that it allows me to give the students more time than other game sites. In math, especially at the older grades, problems become more complex and I want my students taking their time to work out each step. Quizzizz allows me to do that and the students do not feel rushed to just pick an answer. Review collected by and hosted on G2.com.

Nothing, it has been fantastic for me during our hybrid instruction and for teaching in person. Review collected by and hosted on G2.com.

It is a fantastic resource for in class and at home review/practice for education. Review collected by and hosted on G2.com.

I love the fact that it shows me the most missed questions right after the game so that I can immediately review/reteach with my students. Also, when we were in a hybrid setting it was a great way for me to get participation from students at home as well as in the classroom. Review collected by and hosted on G2.com.

I love the easy to understand layout, and the teleport question feature is AWESOME! Review collected by and hosted on G2.com.

If the reports could be in a gradebook-style layout, that'd be great. Review collected by and hosted on G2.com.

Use it. Review collected by and hosted on G2.com.

Engagement has increased exponentially, and having such a wealth of assessments gives me quick creations of quality skill checks and I can spend time with my family. Review collected by and hosted on G2.com.

It has instant feedback and is connected to google classroom. I can easily assign math problems to students. Review collected by and hosted on G2.com.

That I haven’t had time to play with the non multiple choice options Review collected by and hosted on G2.com.

Get it! Review collected by and hosted on G2.com.

Checking for understanding at a quick rate as well as assigning practice problems for my math students. Review collected by and hosted on G2.com.

Quizizz is super easy to create quick, formative assessments and the students love "playing" the quiz, which is actually teaching them content. Review collected by and hosted on G2.com.

The ONLY thing I dislike is the fact that you have to buy the paid version to reopen a certain quiz. A VERY MINOR DETAIL - I just assign the quiz again to reopen it. Review collected by and hosted on G2.com.

Take advantage of the already made and used Quizizz quizzes and edit them to better suit your class. Don't reinvent the wheel when Quizizz gives you ample quizzes to work from and just tweak. Review collected by and hosted on G2.com.

During Distance Learning it is hard to gauge what content the students are actually learning. With Quizizz, I can quickly check exactly what question/content they are struggling with as a class AND as individuals. Review collected by and hosted on G2.com.

I use Quizizz in my class as a quiz/test review tool. My students treat it as a game and enjoy it just as much, if not more, than Kahoot. Because of this, they enjoy Quizizz and engage with it for the entirety of the game, rather than losing interest halfway through like they would in a regular test review session. I also like that after a student gives an incorrect answer, Quizizz provides the student with the correct answer and gives them a wait time before their next question, allowing them to read the correct answer choice. Review collected by and hosted on G2.com.

The only thing that I dislike about Quizizz is that students can get competitive to the point that they become angry when forced to wait, such as when Quizizz shows them memes after a correct answer. Review collected by and hosted on G2.com.

The main problem that I am solving with Quizizz is effective quiz and test review. Students engage more with a Quizizz than a traditional test review, which leads to higher test performance. I can also monitor student progress in the Quizizz, to see who needs help or is off task. Review collected by and hosted on G2.com.

In Quizizz, I like that I can check for understanding in my math classes. I use the create a lesson option and make daily, short warm-ups. I can see how many in the class understand a concept and if I need to review that topic again. I also use Quizizz as a weekly quiz. It grades it automatically and inputs it into my Google Classroom. I use Quizizz as daily homework assignments sometimes too. The students can play Quizizzes during the week as many times as they want to get proficient in a topic area. Review collected by and hosted on G2.com.

I don't like that I have to pay for an upgrade to add some of the cool extras. Luckily, my school is going to pay for the upgrade! Review collected by and hosted on G2.com.

It's a great supplement for distance learning! Review collected by and hosted on G2.com.

As stated before, I am able to assess my students' learning levels on a daily basis. The students enjoy the fun of the games and memes too. Review collected by and hosted on G2.com.

Smooth Interface and ease of usage this website Review collected by and hosted on G2.com.

More customization option for B2B clients and secured way to conduct competition online. Review collected by and hosted on G2.com.

Yes. Ease to set up Review collected by and hosted on G2.com.

Solving problems for time to market to test our set of Quiz competition. Review collected by and hosted on G2.com.

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Manage Your Plan Settings

• Updated October 20, 2023 08:56

Managing plan settings is available to users on the Essential plan . 

You can manage the plan you are subscribed to along with its associated settings from your Quizizz dashboard. 

To manage your plan, log into your Quizizz account and click on 'Settings' on the left navigation pane. Scroll to the bottom of the page to find your plan details. 

Click on 'Add backup payment method' to input the details for a new payment method. You can also click on 'Manage plan' to view more details about your plan and edit related settings. 

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Understanding retirement calculators

How to use a retirement calculator, benefits of using a retirement calculator, accurate retirement calculator: plan your future with ease.

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• Retirement calculators provide a rough estimate of how your invested savings will grow over time.
• Our retirement calculator tracks your retirement savings progress and shows if you might fall short.
• Compare the estimated retirement funds with the amount you will need by your desired retirement age.

Taking advantage of the compound growth, tax advantages, and investment opportunities provided by the best retirement plans is the first step in building long-lasting wealth. But how do you know if you've contributed enough to support yourself during your golden years?

Business Insider's free retirement calculator offers free estimates to help you plan accordingly based on personal details like your life expectancy, income, expected expenses, and estimated retirement age.

Here is how you can use an online retirement calculator and the information you need to generate an accurate estimate. 

Retirement Calculator

Use insider’s calculator to see if you’re on your way to a comfortable retirement by answering a few questions about yourself, your savings, and how long you expect to keep working..

70% of pre-retirement income

*Need is based on covering 70% of your annual pre-retirement income and a life expectancy of 100 years.

What is a retirement calculator?

Retirement calculators are free online planning tools that estimate how your invested savings will grow based on personal and economic factors. 

"If you start investing in your retirement plans in your early 20s, the more likely you'll have a larger pool of money to support you in retirement than if you start saving and contributing to retirement accounts later in life," says Chloe Wolhforth, financial planner and senior managing director at Angeles Investments . 

Business Insider's retirement calculator, above, is designed to track your savings progress with detailed retirement projections. It's based on the idea that Americans generally spend less as they age and can sustain a 30- to 40-year retirement on 70% of their pre-retirement income. 

The calculator generates two important numbers:

• The amount you will have by your desired retirement age. By providing your current savings rate and retirement account balances, the retirement calculator can estimate how much money you'll have in savings or investments by retirement. 
• The amount you will need by your desired retirement age. Using your current income and expected salary increases, the retirement calculator can estimate how much money you'll need in savings or investments by retirement. 

How much you'll need to retire may be more or less than the 70% rule of thumb, depending on your lifestyle. For a more accurate estimate of how much you can expect to spend in retirement, consult a financial advisor . 

Why you need a retirement calculator

The best retirement calculators estimate how much you need to save for your future using personal and financial information. A general rule of thumb is that the earlier you start saving, the better.

Investing your savings and accumulating compound interest is the best way to grow long-term wealth. Now is the time to start if you're not already contributing to a retirement savings plan like a 401(k) or IRA. 

Inflation is considered when calculating retirement savings. But remember, a retirement calculator can't predict the future, and the actual inflation rates may vary. It can't predict market crashes, failed investments, or future financial hardships. It is only one of many financial planning tools you need to ensure a comfortable retirement. 

Input your personal and financial information

For the retirement calculator, we define a comfortable retirement as living on 70% of your pre-retirement income. However, the calculator is customizable. If you're able, incorporate as many specific details as possible. 

Here's what you'll need to input:

• Personal information: Current age and the age at which you expect to retire. 
• Current retirement balance: The total retirement savings across all your accounts, including 401(k)s and IRAs .
• Current household income: Your annual gross income (the amount you earn before taxes).
• Rate of savings: How much money you save toward retirement each month. You can enter this as a dollar amount or a percentage of your income.

The following inputs are pre-filled, but you can change some to customize your retirement calculation further.

• Expected annual salary increases: How much do you expect your salary to increase each year? The calculator's default is 2%.
• Anticipated monthly spending in retirement: We assume you'll spend 70% of your pre-retirement income (the amount you're projected to earn right before you retire), but you can change that number if you expect to spend more or less.
• Life expectancy: How long do you expect to live? The default calculation uses a life expectancy of 100 years.
• Investment returns: We assume your savings are invested and earn a 5% annual rate of return. If your retirement savings aren't invested, you may be missing out on earnings through capitalizing on compound interest. 

Analyze the results of the retirement calculator

Don't be discouraged if the retirement calculator shows you fall short of your financial target. There's still time to adjust your savings rate or investment strategy to meet your goal. 

Increasing your income is one of the most effective ways to catch up on retirement savings. If you cannot score a raise in your current position, consider switching jobs for a higher salary or better benefits, such as a more generous 401(k) match, or investing in stocks and similar assets.

Other strategies you can consider are maxing out your 401(k), contributing to a Roth or traditional IRA , or working with a financial advisor to boost your savings further. 

"Investing is a critical part of growing wealth. It is important to invest savings that you have identified as long-term so your assets can grow over time," Wolhforth says. 

Above all, be flexible. As you approach retirement, consider taking a part-time job, waiting to claim Social Security benefits, downsizing your home, or relocating to a more affordable city. 

Using a retirement calculator to see where you stand provides several perks. Here are some of the benefits of retirement calculators:

• Snapshot of your future: A rough estimate of how much money you'll need to retire by a certain age is better than having no estimate.
• Identify shortfalls: The calculator shows if you might fall short of your financial goal, allowing you to plan for a higher savings rate or find supplementary income sources.  
• See your options: By adjusting the calculator's inputs — such as changing your savings rate or your planned retirement age — you can see how your overall plan is affected.

"Depending on when you want to retire, your employment, your tax status, and other considerations, a blend of multiple accounts may be suitable," says Jordan Gilberti, senior financial planner at Facet. 

FAQs about retirement calculators

The accuracy of a retirement calculator can vary, but it is always a rough estimate. Online calculators cannot predict economic shifts or financial hardships that may impact invested funds. Retirement calculators provide estimates based on your inputs, but their accuracy depends on the data you provide and the assumptions used. 

The information you need to use a retirement calculator includes details about your current savings, income, retirement age, expected expenses, and similar data. Retirement calculators also adjust estimations based on predicted inflation and compound growth. 

A retirement calculator can help you save more by revealing whether your current contributions and investment strategy are on track. Based on your estimated retirement age and preferred lifestyle, you can better gauge how long your savings will last. It helps to set realistic goals and adjust your retirement saving strategies accordingly. 

Many free retirement calculators are reliable financial planning tools using standard financial models. However, retirement calculators only provide estimates, so the generated rate of return may not always be accurate. If you're worried about coming short, consider consulting a financial advisor to help grow your retirement savings. 

You should use a retirement calculator on an annual basis or whenever your financial situation changes. It is a good idea to recalculate your estimated retirement savings if you change your salary deferral rate, have increased income, or are considering withdrawing from your retirement savings to afford other expenses. 

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