Do I Need a Business Plan?
As you work toward becoming a first-time business owner, you might be asking yourself, “Do I need a business plan?” If you are looking to obtain financing for a business you plan to buy, the answer is yes, you absolutely need to have a solid business plan.
Even if you don’t need financing, all first-time business owners should take the time to write a business plan. Consider it as a road map for the first three to five years of your business. It will serve as your guideline for what the company plans to do and how it will be done.
Writing a business plan requires a lot of work on your end, so get ready to do your homework. The process itself will take several months, but it will be worth it in the end. Let’s get started:
The Elements of a Business Plan
A business plan should prove that your business will generate enough revenue to cover your expenses and should include the following elements:
Executive Summary — A brief summary explaining where your company is, where you want to take it and why it will be successful. Even thought it is the first section presented, it should be the last one you write.
Company Description — A description of the different elements of your business where investors will easily understand the goal of your business. Explain any products or services and the competitive advantages that will make your business a success.
Market Analysis — A summary of your industry and market knowledge, including any research findings and conclusions.
Organization & Management — A section that covers your company’s organizational structure, ownership, management team and board of directors. It provides background information and highlights their experiences and accomplishments.
Service or Product Line — A description of your products and/or services and how they stand out from the competition.
Marketing & Sales — A focus on the marketing and sales management strategy for your business, with a detailed description of how you will sell your product/service.
Funding Request —This section outlines your requirements if you are seeking funding for your business venture. Included the amount you want now and in the future as well as the time period that each request will cover, the type of funding you are seeking and the terms.
Financial Projections — A detailed description of key financials, including sales, cash flow and profits to back up your funding request.
Appendix — This section is optional, but includes information such as resumes, permits, leases and other legal documents.
How to Write a Business Plan
The thought of sitting down to write your business plan can be quite intimidating. Well, it doesn’t have to be. There are a few alternatives you can consider to alleviate the stress.
Enlist the Help of a Professional — If the thought of writing your business plan is just too overwhelming, hire a professional consultant, someone who you can trust and work closely with. Remember, while a professional will do the actual writing for you, it’s still up to you to come up with its contents, and that’s a big responsibility. But by working together, you can come up with a good business plan that will accurately represent your business.
Business Plan Software — There are business planning software packages available that will guide you step-by-step though the process and structure your plan for you. Writing a business plan is tough work, but having the right tools will help simplify things.
Remember, your business plan is only valuable if you view it frequently. Track progress toward your goals and measure your results along the way. As you find yourself moving in the right direction, you’ll be glad you did.