Creating a Written Business Plan
Creating and using a business plan affords you the opportunity to think through your business idea, and to track operational results against your plan. It's a valuable tool that can make a substantial difference in the success or failure of a business.
If you have ever thought about going into business for yourself, whether it's something you've always dreamed of, or just considered while having a bad day at your job, that thought represents the starting point of business planning.
If you were at all realistic, you probably also reflected on what impact such a choice would have on your personal life. A steady job probably provides you with some certainty regarding income, how you commute to and from work, and for many workers, known employee health and retirement benefits. In all likelihood, opening your own business will remove much of the certainty and routine you now rely on.
Generally, business planning is about taking your dream of self-employment and turning it into reality. A business plan is the document you create when you take an idea for a commercial endeavor and work through all the factors that will have an impact on the startup, operation, and management of the business.
Smart entrepreneurs plan, not because accountants or business advisors tell them to, but because they understand that it increases their chances for success. Important issues are less likely to fall through the cracks with formal documentation.
Many business owners are successful without ever having created a written plan. These business owners succeeded despite the lack of a formal plan, not because of it. How much better might they have done had their good ideas been coupled with some solid planning?
New entrepreneurs have probably already taken some steps, however informal, to confirm the viability of their new business. Creating a written plan is the next logical step in that process.
Why Have a Business Plan?
Formulating a written business plan will force you to think about where you want your business to go and how you're going to get there. It will become a roadmap for you to follow as your business grows and develops.
A business plan can be assembled in any number of ways. However, some essential components should be included in any plan, which are listed below:
- Business description. Describe the business, including the products and services of the business.
- Marketing plan. Describe the target market for your product and explain how you will reach that market.
- Financial management plan. Detail the costs associated with operating your business and explain how you will pay those costs. Will you need financing to start the business? If so, how much?
- Operations management plan. Describe how you will manage the core processes of your business, including use of human resources.
A business plan can help to establish your business's credentials for purposes of obtaining bank financing or investment by future partners. A plan for an existing business may just deal with a single aspect of the business, such as a new product introduction and its impact on financial management and other ongoing operational issues.
Key questions to consider when developing your business plan include:
- What can a business plan do for you? Why go to the trouble of documenting what you know will work? What events trigger the need to create or update a plan?
- Who is your audience? How will you gather all the information that you need? What should the plan look like?
- How will you organize and present your plan? What documents will you include, and what will each provide to a reader?
- How do real world results compare to the plan? What will you do when things go wrong or the unexpected occurs?
- What would sample plans for a manufacturing company, a service provider, and a retailer look like?
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