Preparing your Business Plan
Your business plan is a put-your-thoughts-down-in-writing approach to bringing your business from an idea to reality. It is a clear description of your business, a written summary of what you hope to accomplish in business and how you intend to organize your resources in order to meet your goals. There are many resources available, including templates to guide the development of your business plan.
Why should I develop a business plan?
There are practical advantages to preparing a solid business plan before you advance too far in your business start up.
- Preparing a business plan encourages an objective, unemotional look at your business project in its entirety. It allows you to define areas of strength and weakness, highlight needs you may have overlooked and identify problems before they arise, helping you avoid costly mistakes.
- The finished business plan is the blueprint for building your company, a reliable operating tool to help you manage your business successfully.
- Most lending institutions will require your professional business plan before approving any capital investment in your business. Use your business plan as a basis for your financial proposal and to communicate your ideas to others. It is a good idea to contact your lending institution before going to them for a funding request to confirm the type of information they require in your business plan.
How should I structure my business plan?
A business plan generally has two components: a written description of the entire project and the financial data.
Your written section should include the following:
- Business description: type, status, business purpose and objective, and unique aspects;
- Marketing strategy: your target customers, why they will want your product or service and how you will reach them;
- Competition analysis: all your competitors, their strengths and weaknesses, and how you will differ;
- Location analysis: your proposed location, the reasons for your site selection and the type of facility you plan to use;
- Production analysis: what and how you will produce and equipment needed;
- Management and personnel requirements: staff qualifications, specific duties and wages
Your financial section should include the following information:
- All funding sources and applications: where you will get your money, how and for what you will use it;
- A capital equipment list: equipment needed and what it will cost;
- Financial statements: balance sheet, projected income statement and projected cash flow analysis;
- Historical business records (if an existing business)
The financial information in your business plan is critical to accurately evaluate the feasibility of your idea and to plan the investment required to bring your business to a stable level of operation. Be realistic in your projections; over-optimism can result in business failure. A professional consultant should review your business plan to ensure it includes all necessary information.