What is a Business Plan?

What is a Business Plan?

A business plan is a document stating a business idea or set of business goals with a strategy for attaining those goals or a desired outcome. If you are ready to start your business, the first step is to make a plan.

However, even if you have already started your company, it is not too late to put together a business plan. If your business is straggling, a plan can help you streamline operations and establish a budget. If your business is launching a new product line or forming a new business partnership, a business plan can be helpful in these situations as well.

With your business plan, you will have a guideline of steps to follow to launch and manage your business. You will also be able to see if and when you are on or off target to meet financial goals. You can then make adjustments to your business processes, marketing, staffing, etc - before it's too late.

To obtain funding from an investor, a bank or VC (venture capitalist), the basic purpose of a business plan is to demonstrate how a goal will be reached before the plan is put into action. Your format can be simple or lengthy, depending on the purpose it is serving and the amount of information required.

Business plans usually contain background details on the organization, financial information. a marketing strategy and a guideline for implementing the processes. Plans can also include charts, graphs and other visual tools to help illustrate important points.

There are seven essential parts to a business plan:

The executive summary, which summarizes your business goals clearly and concisely and sells your business idea.

The company summary, which describes your company and its background.
The products and/or services you are offering, specifically their benefits compared to other vendors in the marketplace.

The market analysis, which describes your target market, the existing competition and expected future growth for the products or services you are selling.

Your operating and marketing strategies and how you will implement them. Generally, strategies include the steps that will be taken and a timeline of when they will be carried out.

The management summary, which gives information on the company's management team and how their skills, knowledge and experience will benefit the organization.

The financial plan, which shows a breakdown of costs, cash flow, sales and profits. The financial plan should cover costs before the business opens and several years into the future, to help demonstrate the profitability of the company.

There are professional business plan writers, like Grow Think or Master Plans who can complete your business plan for you. Hiring a service take the time and effort it would take to do the job yourself. However, it can cost upwards of several hundred dollars, depending on your company's needs.

Another option is to write your own plan. For a small or home-based business, this task may simpler than it first appears. There are books available that show you how, like How to Write a Business Plan or Business Plans Kit for Dummies that can help do-it-yourselfers develop their own. You will need to invest some time and effort, but you will be out less cash because a book costs only about $20.

There is also a growing number of people who want assistance writing a business plan but do not have the money to invest in a professional writer. This is where business plan templates come in. These pre-written plan outlines are usually developed by business planning professionals, where the user simply has to follow the guidelines and insert the information that applies to their particular venture. Templates generally run between $80 and $150, and many can be downloaded directly from the internet.