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:
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.