No matter what stage a business is in, a business plan is a must. Startups especially must have one. A business plan, hereafter referred to as BP, is a financial document with a narrative. I like to think of it as a persuasive essay and math worksheets hybrid. When a new business is in the planning stages, it can be too easy to throw money at everything and hoping everything works out. That mentality is a surefire way to fail.
A BP asks you to answer the hard questions about your business. For example, who is your target audience? Your product/service may not exactly appeal to who you may think. A few years ago a cereal bar opened next to the University of Miami, over 500 different types of cereal and quite a few toppings were offered. College kids and cereal should have been a home run, but it fell short. I went in there one day and all I saw were young children delighted at the idea of Capt Crunch and Coco Pebbles in the same bowl as strawberry milk.
The owners tried to capitalize on this surprise audience too late in the game and closed within six months. If they had been open to other audiences, they could have done quite well. This business exemplifies the value of a BP for truly contemplating who your audience(s) could be and who might be interested as well.
When you open a business, there should be some room as to who your target audience is. Your marketing efforts should be directed to who you feel will be a stronger presence, but keep in mind that who you want to respond and who actually responds are two different beasts.