When you are ready to take the leap into business ownership, one of the most important steps you can take is to make a written business plan, which is a road-map that will help guide your business through the ups and downs and the day-to-day normal business activity. The idea of writing a business plan is enough to make many people crawl under their desks, but there is no reason why writing a business plan needs to be torturous.
Why You Need to Make a Business Plan
Although you don't have to have a business plan to launch a business, it is a good idea to make a business plan for several reasons:
- If you plan to seek outside financing, a business plan is a requirement for most lenders and private investors.
- Completing a business plan is a good way to have your business information at your fingertips, for your own reference or to answer questions asked by others.
- You can use a business plan to assess your company's progress and determine where changes or adjustments may be necessary.
Sections of a Business Plan
A business plan is broken down into several sections. Each section explains a different aspect of the business or how the business will fit into its specific industry.
- Executive summary: Although this section appears first in the business plan, it should be written last. It gives an overview of the information contained in your plan.
- Company description: In this section, you explain your corporate structure (sole-proprietor, partnership, LLC, etc.). You will also provide the location of the business and a brief description of what the business will do.
- Product or service: This section thoroughly explains the products and services your business will offer, with an emphasis on how those products and services will benefit your customers.
- Market analysis: This is where you show your understanding of the marketplace, who your competitors are, the share of the market you hope to achieve, and how your products or services will fill a need not currently being met by your competitors.
- Strategy and implementation: This is a breakdown of how you plan to launch your business and your ideas on how to stand out in the marketplace. You will also explain how you plan to maintain your business growth.
- Web plan summary: If your business will have a web presence, use this section to explain the costs involved in building and maintaining your website, Internet marketing campaigns, and social media strategies.
- Management teams: Introduce the key members of your management team and provide brief biographies highlighting their experience.
- Financial analysis: This section includes the projected profit and loss and cash flow tables for at least two years. Five-year projections are preferred for investors.
How to Write a Business Plan
You can sit down and make a business plan using the word processing software of your choice, but you can also use any of the business plan software packages currently on the market. Using software and the available business plan templates will help you format the plan and will make adding charts, tables, and other graphics easier.
Get Help with Your Business Plan
If you are struggling to make a business plan work for you, there are resources available to help you. You can contact your local SCORE office and be paired with a retired business professional who can answer any questions you might have. You can also contact your local Small Business Development Center to assist you with research and a variety of business issues, including drafting your business plan.
Would you take a cross-country trip without using GPS or at least a road map? Then why would you start a business without the proper tools to guide it? If you want a real shot at business success, make a business plan. It will allow you to see your whole business in perspective and give you insight on how the business is faring.
When you are ready to take the leap into business ownership, one of the most important steps you can take is to make a written business plan.