A business plan is a roadmap of your business that helps guide you through the formative years of your new business as well as a tool to show potential investors that you know what you’re doing. Usually, a burgeoning entrepreneur writes a business plan to put down in writing the goals of the business, the strategies to help attain those goals, and to ascertain what potential challenges lay ahead.
Often a big part of a business plan analyzes how much initial capital is necessary to start the business and to help keep it going until it breaks even. With this goal in mind, the plan is then presented to potential investors to raise the necessary capital to fund the business.
The Business Plan
A business plan can consist of just a few sections or as many sections as you feel necessary for your business' success. All business plans typically include three main sections that focus on the business, the market, and your plan for financing.
Business: Discuss the industry your business is in, the business structure, and the product or service you provide.
Marketplace: Describe and analyze your potential customers, the competition, and how you plan to come out on top.
Financial: Discuss income and cash flow and calculate break-even analysis, when the company will be profitable (it’s always a good idea to use an accountant to help with this section since the calculations can get complicated).
Include All of the Details
The more detailed information you can cover in your business plan, the more prepared you will be for unseen challenges. A detailed business plan usually has seven sections:
- executive summary
- business description
- market strategies
- competitive analysis
- design and development plan
- operations and management plan
- financial variables
You can also tailor your plan to meet specific objectives, such as expanding the business, managing it better or finding key employees. Once a business plan is put to use, it is a good habit to continuously refer to it to determine if the business is heading toward the right goals. If not, you can always adjust the plan to include steps to keep the business on target.
Make It Your Own
The business plan you create will vary in appearance and detail from other entrepreneurs’ plans as it focuses on the goals you want your business to achieve. Business plans may focus on capital start up or on other goals like attracting a partner, finding new business prospects, or expanding into new markets. The different sections of your plan allow you to highlight specific areas, whether you intend to use your plan as a presentation for a venture capitalist or keep it for internal use as a strategic plan for developing the future. As your business grows always refer to your business plan to ensure you are achieving your business goals or update it as necessary to the changing needs of the business.
