In thinking about your business plan...
Your business needs planning. Careful planning is one of the most vital parts of any successful business.
The task of developing a plan will help you recognize and evaluate the two main types of business risks: internal, over which you generally have control, such as staff, inventory and location; and external, including the economy, new regulations, weather - those things you can't change.
With your expectations and plans clearly laid down on paper, along with possible obstacles and solutions, you'll find yourself better able to express them to your "team members" -- partners, family, employees -- so that everyone will have a common goal.
A business plan benefits you in another way too. It's almost mandatory if you want to obtain capital from private investors, venture capitalists, or commercial lenders such as banks or trust companies. One that's well prepared will serve as tangible proof of your ability to manage and plan -- a significant factor in a financier's decision to give you the funds you need.
Because planning is so crucial to your operation, it's important as you go through the process to examine every aspect of your business carefully and honestly. Be realistic in assessing what you're capable of and the possibilities that exist for your business.
Some questions you should be asking yourself are:
You'll find that a business plan is a useful control tool to help you assess progress. By using it to monitor what's happening on a month-to-month basis, you'll be able to take corrective action quickly if things go astray. You can't afford to wait until your fiscal year-end to see if you've made a profit; by then it may be too late.
Your business plan is a written summary of the past, current and future activities of your business. When you are planning to start a business, its most important purpose is to help you be sure the business is carefully planned and makes financial and operating sense.
The business plan is your game plan. It sets objectives, guidelines and milestones on paper.
The business plan also acts as a standard against which to compare your actual results after the business has been started. Regularly comparing your planned and actual operations will allow you to identify problems before they become unmanageable. Regular comparison and corrective actions will help keep your business on track.
The plan may also be used to convince investors, bankers, government agencies or other sources of financing to invest money in your business. Therefore, it should be complete, organized and factual. It can also be used to convince others, such as customers, suppliers, developers or landlords, to support your services, supply your raw materials or allow you to lease their property.
Each year, update your plan using the informal business plan as a guide. That way, you'll always stay on track - and your business will be well on its way to success.
Ultimately, the business plan should be prepared by the owner(s) and manager(s) of the firm. You may use outside professionals, such a lawyers and accountants, but the plan should be your own! You should be able to present it, summarize it, and answer questions about it! Depending on the audience, of course, you may want to vary what parts of the plan you reveal.
Components of a business plan:
