Your Business Plan

A business plan precisely defines your business, identifies your goals, and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.

Overall, a business plan helps evaluate the feasibility of a concept, how much financing to obtain for start-ups and expansion. A business plan creates goals and objectives to measure and motivate its owners, employees, and investors.

Finally, a business plan helps set-up the company philosophy and overall operating structure. It reveals flaws in unorganized ideas and helps place ideas in your head onto paper. Ultimately, working as a reference guide when problems or setbacks arise and helps you plan for the future.

Planning Your Business Plan

The importance of a comprehensive, thoughtful business plan cannot be overemphasized. Much hinges on it: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives.

Despite the critical importance of a business plan, many entrepreneurs drag their feet when it comes to preparing a written document. They argue that their marketplace changes too fast for a business plan to be useful or that they just don't have enough time. But just as a builder won't begin construction without a blueprint, eager business owners shouldn't rush into new ventures without a business plan.

Before you begin writing your business plan, consider four core questions:

What service or product does your business provide and what needs does it fill?
Who are the potential customers for your product or service and why will they purchase it from you?
How will you reach your potential customers?
Where will you get the financial resources to start your business?

Writing the Plan

What goes in a business plan? The body can be divided into four distinct sections:

Description of the business
Marketing
Finances
Management

Addenda should include an executive summary, supporting documents, and financial projections. Although there is no single formula for developing a business plan, some elements are common to all business plans. They are summarized in the following outline:

Elements of a Business Plan

Cover sheet
Statement of purpose
Table of contents
The Business
Description of business
Marketing
Competition
Operating procedures
Personnel
Business insurance
Financial Data
Loan applications
Capital equipment and supply list
Balance sheet
Breakeven analysis
Pro-forma income projections (profit & loss statements)
Three-year summary
Detail by month, first year
Detail by quarters, second and third years
Assumptions upon which projections were based
Pro-forma cash flow

More Resources About Business Plans

Sample business plan sections forms

Sample business plan links and additional resources