Writing a business plan will help you create a foundation for your business. It's a document that serves as a guide to how you want the business to grow, what markets you want to service, the feasibility of starting the business, and financial forecasts for the business.
Writing a business plan is a critical step in launching any business venture. Not only will it allow you to think objectively and critically about the chances of success of your business, in the future it will serve as a guide to keep the business on the right path. The business plan should include a statement of the objectives of the business, as well as more detailed information such as market strategies, profit and loss projections, and a cash flow analysis.
A business plan can be fairly short or long and incredibly detailed. Far more important than length is that the business plan be as comprehensive as possible. The best way to ensure a successful business is to think critically while writing your business plan.
Why do I need a business plan?
Writing a business plan forces you to be objective rather than overly optimistic when contemplating whether to enter into your business. When you sit down and honestly consider the financial picture, market projections, and business objectives, you're more likely to make a rational decision. Oftentimes, prospective business owners will get caught up in their "great idea" or dream of running their own business and fail to honestly account for all the factors that come into play.
Business plans are a necessary step to reduce the likelihood that you'll enter into a business venture that had less than a fighting chance to survive. Perhaps your great idea doesn't stand up to the scrutiny involved during the process of writing a business plan, or maybe after careful consideration you decide that the numbers just don't make sense. This is the kind of information that you want before you invest your time and money into a business, not afterward when it's too late. Whether or not you go forward with the business, the information gleaned from writing a business plan is invaluable in the business' future.
Do I still need a business plan if I'm going to fund the business myself?
Yes. Business owners often operate under the mistaken assumption that business plans are only necessary when seeking financing from investors. But a business plan is a blueprint for your business, and can be helpful even if you intended to provide all the capital for your business.
Writing a business plan helps businesses stay on track as they grow. You can use the business plan as a guide and as a goal. If you've done the proper research you will have calculated solid financial figures which the business can use as targets to measure its relative success. These targets will help keep the business on the path which you originally intended and discourage tangential ideas from pushing the business off course.
If you were building a home, you would obviously give serious thought to every step of construction, from creating the foundation to laying bricks and installing flooring. You would do this before you poured even a drop of cement, and you would refer to the blueprint during construction. You should consider your business in the same context and give the business plan as much time as necessary to ensure you have the proper blueprint, then continually refer to the business plan as the business grows.
How do I write a business plan?
There is no exact science to writing a business plan, though there are guidelines which most successful businesses follow. First, is to include a statement outlining the objectives and goals of the business. Second is to include financial information such as startup costs, revenue projections, profit and loss projections, breakeven points, and cash flow analysis. You don't have to be an accountant to use these figures but you should at least be familiar with the terms and have another person familiar with accounting double check your numbers. Catching financial issues early is critical.
Next, you'll have to consider your audience. If you're writing for the purpose of getting capital for your business, you'll want a strong emphasis on financial information and a professional tone in writing. If the business plan is primarily for yourself, you can dispense with the professional writing style and a few elements of financial projections, although for best results, you should do as many financial projections as possible. Even if you're not aiming to get investors, financials will help you understand how your money will be used.
Do I need to meet with an attorney before writing my business plan?
It's really up to you, and different types of businesses will have different needs, but meeting with an attorney who is well-versed in legal issues affecting small businesses can be quite valuable. Even if you don't have specific questions, an attorney can review your business plan to make sure it adequately reflects relevant legal realities, such as the costs associated with certain regulations. Call a business and commercial law attorney in your area to get started.