Three Questions You Need to Answer Before Writing Your Business Plan

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A business plan is an important document for any company. It defines the company’s objectives, and how the company intends to achieve those objectives.

Such documents are a vital part of encouraging a bank to give you a loan, getting investors to back your ideas, or even just displaying a better understanding of how your company is operating.

Considering how important a business plan is, it is necessary to do a good job, so you should not jump straight into writing one without a certain degree of preparation. Pause for a second, and consider the answers to some basic questions to help you construct the business plan you need.

Why Do You Need a Business Plan?

Anybody beginning or extending a venture that will consume significant resources of money, energy or time, and that is expected to return a profit, should take the time to draft some kind of business plan. However, there are several different reasons why you might want a business plan, and your particular reason affects the way you create the plan.

For many people, the reason for creating a business plan is to get financial aid from investors and banks. Plans with this aim need an exceptional executive summary that gives a clear view, in layman’s terms, of how the company operates. Give special attention to the financial side of things, as an investor needs to see projections that suggest a healthy return on an investment.

Another common reason for a plan is to monitor the ongoing growth and success of the company. Update such plans regularly, particularly at the beginning of a new financial year, or when there has been a dramatic change in the world economy or your industry specifically.

What Are Your Goals?

It may seem obvious, but a business plan must be more than a set of financial projections and a breakdown of what you are doing right now. It is a plan, and therefore needs defined goals.

Before you put pen to paper, consider how you want your company to expand over the period of the plan (normally 3 to 5 years). Define your aspirations. This not only keeps you focused, it also allows investors and associates to understand how you intend to achieve your goals.

Planning how to reach your goals also helps to define potential risks, giving you ample time to prepare for them. Even if you have no idea how to go about showcasing your goals and ambitions, there are many examples of business plan and templates to give you an idea as to what needs to be included to help you showcase your plan in effective manner.

How Much Detail Do You Need?

Nobody knows your business as well as you, and when you start to lay out your strategies and projections it is easy to get wrapped up in the fine details. However, writing a document that is hundreds of pages long is not a good way to go about creating your plan, according to Inc.com.

Investors, or potential customers, are unlikely to be interested in wading through that much information; they want to see clear and concise data, presented in easily digestible quantities. In particular, avoid technical information. Aim to create a document that anyone can understand.

Being too vague is also a problem, especially if you are seeking financial assistance. Nobody is going to put money into a project unless you have clearly defined the risks and rewards.

You may be concerned that providing too much information to company outsiders puts you at risk from competitors. If this is a concern, consider requesting that investors sign a non-disclosure agreement.

Plan for Success

A business plan is a constantly evolving document that represents everything your company is and has the potential to be. It helps generate new business, encourages investment, and allows you to keep your business on track. It is worth taking the time to do a good plan, and to update it regularly.

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Gail Gardner

Small Business Marketing Strategist at GrowMap
Creator and owner of GrowMap.com, Gail is primarily known for mentoring small businesses and encouraging bloggers to join collaborations to share skills and support small business.

Comments

  1. Brilliant! I like your post Gail. Just the last paragraph “Plan for success” I think in the other way. It’s that if we build a business plan, we should plan for success. What will we do ì we success? What’s next step? Many people do not plan for a success business so they won’t success or success but don’t know what to do.
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  2. This is just brilliant! There’s no overlooking a solid business plan or even putting it on the back-burner. There is so much help on the net with websites; including yours, that help businesses with the fundamentals to an awesome business plan. Keep up the good work on this site!

  3. Nice Article ! Yes whenever you plan your business you must research first about business ! Like your goals, target customers, back up and investment plans and most important your competitors !

  4. I think one should be prepared for the above mentioned three questions, which may be compulsory for writing your business plan. I would like to say thanks for your informative post.
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  5. Dejvis Devic says:

    Japanese have the most meaningful explanation how to start a good business.It is called KAIZEN (google it).Kaizen is based on 4 factors that you need for your business to be succesfull.Plan it,do it,test it,improve it.Those are the four biggest things you need to do in starting any business you want.Japan was partlt destroyed by the US people,they needed a good plan and they made it,kaizen helped them to grow to what they are today.

  6. Nice post Gail! Business plans are good for entrepreneurs starting a business who want to attract funding and established firms looking to expand into a new venture or grow their business. Its a is a road map to the success of a business, many businesses fail every year because of improper planning. And having a good business plan eliminates this dilemma.
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  7. great one…very happy after read your article..great work..
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  8. Murphyaik says:

    I strongly agree with your write up. It is all about goal, That should always be the first. If the goals are determined, it makes every other thing easier.Thanks once more.

  9. Knowing what do you want and what will it take will take you to success and your deatailed post will sure enthusiase them.
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  10. Thank you Gail Gardner. You’re right that implementing a successful business starts with a good plan. Use your business plan to set concrete goals, responsibilities and deadlines to guide your business. Also assign tasks to people and department for implementation.
    Julie Dawn Harris would love you to read ..Business Week: 10 Marketing Rules from Super Bowl AdsMy Profile

  11. nice said Gail Gardner
    that’s most important before start any business first know collect the all data about the,Behind the successful business so many reason and in this time lot of competition in market so before start business must aware from the all thing,
    This is nice motivation post.
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  12. Joe from talkcarinsurance says:

    First you should be able to understand your business plan yourself so that you can sell it to bank managers or potential investors. They want to see the expected turnover, overheads and net profit. You should not project these figures in best case scenarios but worst case scenarios. This shows that you covered the best case scenario and it can only be up from there.

  13. One should make a proper plan and following that plan strictly. Describe your creation or service, and the market you will establish in and your skill in the business and recognize your organization set, where the business will manage.

  14. Most of the business plans are used for financial aid purpose, but this should be the tool for the business owner to have when they are running the business. The business plan will keep our actions on track. Aside from the business plan, I think people should have a list of action plan that is correlated to the business plan.

  15. Akshay Nimbalkar says:

    wonderful article. i like this. threads and success is journey of business

  16. Very wonderful post, Actually these business ideas are very must for every business people to start.

    Thanks

  17. Planning for everything has to be made, i am agreeing only this point. And success for those who believed in planning.

  18. I am agree with your all three topics,
    but “Plan for Success” is like cherry on the cake.!!

  19. Running a business without a business plan is like traveling in train without knowing the destination. You have to knowledge about which business you want to start. Before starting the business we have to set the goals.

  20. In order to start a business, a person should know the field in which he is expert. He should also have the passion, goal ,dedication & the love for his business, then only he can think of spreading his business and take it to a new height.

  21. Hi Gail, Great article. It is always a good idea to think through everything before you start. Not least of all that there is a REAL business opportunity before you put pen to paper. With this in mind it is also worth doing a feasibility before you invest in a full business plan.Many thanks,Jon

  22. Valentines Day 2014
    Twitter:
    says:

    Yeah Proper planning and then executing your plan is must. You have to be consistent if you want to make your business success. Otherwise its not cup of your tea. Am i right?

  23. Same opinion with you about starting a new businss. Thanks for the helpfull post sothat can develop easily.Thanks

  24. Starting a business without plan is just like doing suicide.
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  25. Gretch Brent says:

    I think that even if you will not be spending a significant amount of time, money, and effort on something, as long as it is a business venture, you need a business plan. If you are going to try affiliate marketing for instance, you have to have a system which would help you pick out what product to promote. Simply because your time is important and a business plan can ensure that it won’t go to waste.
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  26. Implicit in a business plan exercise is the testing of your assumptions and ideas. Putting them on paper and running the numbers may show gaps in your plan and shortcomings. Also, from a legal perspective be sure to have the right legal entity in place for your business. This is extremely important in the US.

  27. Planning is most important in business, we should devote more time on business planning. If planning is good our business we grow. However if proper work out has not being done on business planning there are many examples of businesses collapsing.
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  28. Hello,

    Exactly you are right, you should have goals or the purpose of running your business. What objectives or aspirations you want to accomplish. Very informative post, thanks for sharing.

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