Developing your
business plan
A business plan precisely
defines your business, identifies your goals, and serves as your
firm's resume. The basic components include a current and pro
forma balance sheet, an income statement, and a cash flow
analysis.
A business plan helps you
allocate resources properly, handle unforeseen complications, and
make good business decisions. Because a business plan will provide
specific and organized information about your company and how you
will repay borrowed money, a good business plan is a crucial part
of any loan application. Additionally, it informs sales personnel,
suppliers, and others about your operations and goals.
Plan your business plan
The importance of a
comprehensive, thoughtful business plan cannot be
overemphasized. Much hinges on it: outside funding, credit from
suppliers, management of your operation and finances, promotion
and marketing of your business, and achievement of your goals and
objectives.
The business plan is a necessity.
If the person who wants to start a small business can't put a
business plan together, he or she is in trouble. In other
words, if you cannot put it down in writing, you are simply not
going to be able to execute it.
Many entrepreneurs will argue
that they understand the business plan and that writing down the
business plan is simply a waste of time when they aren't going to
be seeking financing or a partnership. Nothing could be
farther from the truth.
Developing your business plan
helps you organize your own thoughts and you will almost certainly
find issues that you did not anticipate. Good business ideas
can go awry when there are several choices to make that had not
been considered before. A good business plan lays the
groundwork, helps define what you want, where you are going, and
whether it will make money.
Despite the critical importance
of a business plan, many entrepreneurs drag their feet when it
comes to preparing a written document. They argue that their
marketplace changes too fast for a business plan to be useful or
that they just don't have enough time. But just as a builder won't
begin construction without a blueprint, eager business owners
shouldn't rush into new ventures without a business plan.
Before you begin writing your
business plan, consider four core questions:
- What service or product does
your business provide and what needs does it fill?
- Who are the potential
customers for your product or service and why will they
purchase it from you?
- How will you reach your
potential customers?
- Where will you get the
financial resources to start your business?
Beyond that, a good business plan
helps you isolate your best opportunities, makes you think, and it
sets goals and standards that you've only kind of drifted through
in your thought processes.
