One of the first steps when formulating a strategy for any new business is the writing of business plan. If you think only Type A personalities compose business plans, you’re wrong. Talk to a random sample of successful business owners, and you will be amazed at how many took the time to put their business plans into writing.
If you are truly determined to succeed, you will follow their example. Why? Without a plan, you are leaving far too many items to chance. Just as a blueprint is used to ensure that a building will be structurally sound, a business plan will help you to see whether your business will be able to stay afloat financially.
A Simple Plan
The idea of a business plan is simple: to bring together in one document the key elements of your business. These elements include what products or services you will be selling, what they will cost to produce and how much sales revenue you expect during your first months and years in operation. Most important, your plan will help see how all the disparate elements of your business relate to one another, which will allow you to make any necessary alternations in order to maximize your business’s potential to turn a profit.
Additionally, business owners who want to borrow money or attract investors often write business plans. This is good because most lenders or investors will want to know as much about your business as possible before deciding to back it financially. Unless you are prepared to show them a well thought-out business plan for how you expect your business to become profitable, you won’t have much chance of convincing them to finance your project.
However, creating a business plan also is a good idea even if you don’t need to raise start-up money. The discipline involved in developing financial projections such as a break-even analysis and a profit and loss forecast will help you decide if your business really is worth starting, or if you need to rethink some of your key assumptions.
Write For Success
All business plans needs to show two things: that the business idea is a good one, and that the numbers show a profit. In addition, all good business plans have two basic goals: to describe the fundamentals of your business idea, and to provide financial calculations to show that it will make money. However, depending on how you intend to use it, a business plan can take somewhat different forms.
For example, if you expect to use your plan to borrow money or interest investors, it should carefully be written and edited to sell your vision to skeptical people. Normally this means that it should include a persuasive introduction and request for funds, in-depth market research information, an evaluation of your main competitors, your key marketing strategies and a management plan. Additionally, it should contain detailed financial information including your best estimates of start-up costs, revenues and expenses. Finally, since your plan will be submitted to people you don’t know well, the writing should be polished and the format clean and professional.
