Developing a Business Plan

The Business Plan is a written summary of what you hope to accomplish by being in business and how you intend to organize your resources to meet your goals. A business plan is a road map for operating your business and measures progress along the way. There are three major reasons for developing a business plan.

• • It encourages realism: The process of putting a business plan together, including the thought you put into it before beginning to write it, forces you to take an objective, unemotional look at your business project in its entirety.
  • It is an operating tool: When a business plan is properly used, it helps you to manage your business and work toward its success.
  • It is a way to communicate ideas: it provides the basis for your financial proposal, and you can share additional details in conversation.

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The importance of proper planning cannot be overemphasized. By taking an objective look at your business, you can identify strengths and address weaknesses. Moreover, your business plan provides the information needed for lenders or investors to evaluate your venture.

Structure of the Business Plan

The business plan is divided into two main sections, with the first section being the written description of the entire project. This section should include explanations of the following topics:

• • A description regarding the type, status, form and aims of your business, as well as what is unique about it
  • A marketing strategy which identifies your target customers, their present and potential size and how you will satisfy them (see the “Developing a Marketing Strategy” article)
  • A competition analysis including a list of all competitors, and the strengths and weaknesses of each
  • A location analysis including where you will locate, the reasons for your site selection and the type of facility to be used
  • A production analysis which will describe what and how you will produce/service and the type of equipment needed
  • Management and personnel requirements which will list the background, experience, specific duties and wages and salaries of the staff

Section two of a business plan consists of financial data. It qualifies facts and assumptions laid out in section one and should include the following information:

• • Sources and applications of funding which list where you will get your money and what you will use it for
  • A capital equipment list that describes the equipment needed and what it will cost
  • A balance sheet, a projected income statement and a projected cash flow analysis
  • Historical records (if already operating)

The information contained in the financial data section of your business plan is critical to accurately evaluate the feasibility of your idea and to plan just how large an investment is required to bring your business to a stable level of operation. Remember to be realistic in your projections.

Before presenting your business plan to potential lenders/investors, you may want to have it reviewed by a consultant to ensure that all necessary information has been included. Next, use the business plan to map out the feasibility of your idea on paper. It is much cheaper to never start a business than it is to start one and fail early. Remember, your business plan is a tool for all parties, including lenders, investors, and you.

Click Here to view the Business Plan Template