There are two instances when you should write a business plan. The first is when any individual or organization that you want to work with specifically asks for it. The second is for yourself to help you organize your ideas.
Even if you don’t need a formal business plan to give an investor, you should always go through a rigorous planning process for your own sake to create a good strategy for your business. In my opinion, that is the true value of business planning.
The process of thinking about and planning your business can help you catch and correct any mistakes before you start. It is much more expensive to realize that you are heading in the wrong direction after you start your business than during the planning stages. The value of business planning is to identify problems and fix them early, while it is still cheap to do so. As a rule of thumb, the later you find problems with your business, the more expensive and time-consuming they will be to fix.
There are additional benefits to writing the business plan even if you don’t plan to use it for raising money. The process of writing can help you think through strategies more easily than if the plans were just in your mind. Writing out your plan also gives you a central place that contains strategies that you and your partners can agree on. This will reduce misunderstandings among team members and facilitate discussions and brainstorming sessions. Another benefit of having a written plan is that you can send it out to gather feedback. Plus, if your plan is written, you will be able to use it for reference in case you forget any details.