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.
Gail Gardner
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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!
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 !
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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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.
Hello Dejvis,
I was the Kaizen person in my office at IBM. We had high hopes we could actually get ideas to upper management using it, but that isn’t what happened.
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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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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.
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.
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.
wonderful article. i like this. threads and success is journey of business
Very wonderful post, Actually these business ideas are very must for every business people to start.
Thanks
Planning for everything has to be made, i am agreeing only this point. And success for those who believed in planning.
I am agree with your all three topics,
but “Plan for Success” is like cherry on the cake.!!
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.
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
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.
Thank you, Steven, for sharing your insights. Those interested can read a previous post on Determining the Right Legal Entity for Your Business.
That post contains an excellent video that makes understanding the various types easier.
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Hey Gail, it is my pleasure. Great links. One final point without being a stick in the mud. It should be pointed out that even with the information out there it is still easy for laymen to make mistakes on entity selection. The facts really matter and in some cases state and local laws can really throw a monkey wrench into the equation. For example, the Philadelphia Business Privilege Tax needs to be considered when making this choice of entity decision.
Hi Steven,
Yes, entity choice makes so many differences regarding licensing and especially taxes. That is why I found that video I put in the other post – so that people are more likely to understand that it isn’t simply a matter of opening the doors if you want to do business as a legal entity.
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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.
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.