Developing a Business Plan

If you are someone who has spent hundreds, if not thousands, of hours thinking about starting your own business, when find yourself ready to take action, it all begins with a business plan! 

One of the best investments you can make to turn your dream into reality is to spend the time, effort and energy to develop a formal business plan. But, there is a great deal of difference between pondering business choices and developing a business plan.

There are three important benefits of having a formal business plan. The first is that a business plan will be an essential part of any request for financing. A well-prepared plan improves your changes of getting the funds you need. Second, it can serve as a guide for policies and actions for your company over a number of years. Strategies and statements should be well thought out, unambiguous and capable of being carried out. Third, the process of preparing the plan will enable, if not force, you to focus on issues that are essential for the future success of your business.

A formal business plan should include the following:

  1. Executive Summary. This introduces and summarizes your business plan in its entirety, including your business’s profile, mission, and how you plan to get there.
  2. Market Analysis. This part involves thorough research on the industry of your business. It’s the quantitative and qualitative assessment of your market including environment and competitive analysis, and risks.
  3. Company Description. In addition to the basics such as proposed location, real estate, facilities, and equipment, this should also offer information about your company’s purpose.  List your mission, goals, and objectives.  State what your company does, and what differentiates you from others similar to you if any. It would also be wise to mention your target audience/clients in this section and any substantial current clients or partnerships.
  4. Management and Organization. Discuss your planned management and reporting structure, identify key employees and list their backgrounds, list all planned positions, and identify roles of each. 
  5. Marketing and Sales. How do you plan to promote your business and make sales?
  6. Services and/or Products. Talk about what you’re selling or what services you offer, and who they will benefit. Go into detail about these products or services.
  7. Request for Funding.  If you need assistance with funding your business or products, mention how you plan to access those funds. 
  8. Financial Projections. In this section, provide financial projections for 3-5 years. How much you plan to spend, earn, and what your profit is expected to be.  Documents needed include Income statements and Balance sheets, both historical and projected as well as a Cash flow analysis.

As you proceed through the business plan, remember that statements should be supported with data whenever possible. Data adds creditability. It is often advisable to use charts and graphs to present the data to make it more easily understood.

While the preparation of a formal business plan can be an arduous task, it is time and effort well spent. The process of preparing your plan will put you in a better position to make daily decisions and the final document will be useful when seeking financing, explaining the business to potential investors and key employees, and maybe even someday in creating a document for selling the business you worked so hard to create.