Many people assume that a formal business plan is only for big time businesses. Wrong. A business plan is for anyone who wants to give their enterprise their best possible shot. It is where you detail out all the operational, marketing, and money matters of your business. It is, in essence, a road map. With it, you will better be able to reach your goal. Without it, you run the risk of spending precious time and money traveling in circles or unwittingly wandering into danger zones.
In response to the question, what a business plan is, follow the following”
- A business plan is written by the home-based business owner with outside help as needed.
- It is accurate and concise as a result of careful study.
- It explains how the business will function in the marketplace.
- It clearly depicts its operational characteristics.
- It details how it will be financed.
- It outlines how it will be managed.
- It is the management and financial “blueprint” for startup and profitable operation.
- It serves as a prospectus for potential investors and lenders.
A study for “why” of creating it, note:
- The process of putting the business plan together, including the thought that you put in before writing it, forces you to take the objective, critical, unemotional look at your entire business proposal.
- The finished written plan is an operational tool, which, when properly used, will help you manage your business and work toward its success.
- The complete business plan is a means for communicating your ideas to others and provides the basis for financing your business.
While you are to be the author of the document, you shouldn’t hesitate to get professional help when it comes to areas outside your ken, such as accounting, insurance, capital requirements, operational forecasting, and tax and legal requirements. Finally, in response to the question, “When should Business Plan be used?” note:
- To make crucial startup decisions
- To reassure lenders and backers
- To measure operational progress
- To test planning assumptions
- As a basis for adjusting forecasts
- To anticipate ongoing capital and cash requirements
- As the benchmark for good operational management
If you have been doing your research and homework all along, you probably have most of the raw material for the business plan, so it won’t be such an awesome task.
Business plans differ greatly, depending on the nature and scope of the enterprise. Some elements a person in a retail sales business would need in his or her business plan may be totally irrelevant for your service business. Similarly, business plans vary in length—from five or six pages or a virtual booklet; some are written in an engaging narrative style while others take another approach—just the facts. However, while business plans may differ in style, tone, length, and components, there is some common ground. Below is a list of items that should be in almost every business plan:
- A summary of the nature of your business and its principal activity with a detailed description of the product(s) or service(s) you will offer.
- A statement as to the form your business will take (sole proprietorship, partnership, incorporation) and how it will be managed and operated (with information on employees or subcontractors if applicable).
- A discussion of any extra-ordinary (and potentially problematic) matters revolving around such things as space requirements, production processes, and operating procedures.
- A discussion of major trends in your trade or profession.
- A discussion of your competition and the basis on which you will compete.
- A description of your target market that might include a profile of a typical customer or client.
- A discussion of your plans for pricing, sales terms, and distribution.
- A discussion of how you intend to advertise and promote your products or services.
- A detailed statement of startup and operating costs for at least the first year.
- A discussion of how your business will be financed.
- Profit and loss and cash flow statements for at least the first year of business.
If this list has made a business plan seem all the more scary and arduous a task, don’t panic. There are books on the market that will guide you through the process.
A clean attractive business plan is a sine qua non if you will be applying for a loan or looking for investors. But even if the document is for your eyes only, you owe it to yourself to produce a professional-looking document. Since it is your road map, the neater it is the better it will serve you when you refer to it at various stages of your entrepreneurial journey.
My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.