Business Plans Aren't Just For Your Banker
When starting a business, most banks or investors will require a business plan, which is a detailed written summary of how a business or entrepreneur plans on organizing and then effectively running a potential business in a way that will allow it to succeed. These are often required so the investor knows the plan is well-planned for and well thought out before investing money into it.
But if you're not planning on writing a business plan because you won't be going through a banker or an investor to fund your business, you could be making a big mistake. Business plans aren't just for your banker - a business plan is an invaluable tool for you as an entrepreneur as well.
Why Do I Need a Business Plan?
Starting a business requires a great deal of effort, money, and time. Having a documented, well thought-out plan will help you to see if your plan is actually feasible or not. In addition, it will help you map out the steps you need to take in order to set up a profitable business.
Writing a business plan will also allow you to cover points you may not have though of.For example, some entrepreneurs might overlook the need to develop employee contracts. Or perhaps they neglected to factor certain things into the budget, like office supplies or insurance. Following a business plan will ensure that you cover all necessary items that could affect the success for your business.
Making Your Business Plan Work for You
In order to make your business plan work for you, it should include a number of things that will help you map out your business. There are many resources available to assist you in developing an effective business plan and include books, websites, and software. The following points should be included in your business plan:
- Executive Summary. Generally, this is designed for those reading your business plan. If it's just for you, an executive summary may not even be necessary. If you opt to include an executive summary, it should explain the basic business model and the reasoning behind why this strategy will result in an effective business.
- Mission . This section contains the purpose and mission statement of your company. It will also help you determine what you want to accomplish with your business.
- Keys to Success. This section will include the tools your company will use to set itself apart from the competition and succeed in the industry.
- Company Summary. For a brand-new company, the company summary should include expected number of employees, projected location, etc.
- Services Provided. This is a basic run-down of what services your company will be providing to its customers.
- Market Analysis Summary. This section should include the industry, product and pricing strategy, promotion and distribution strategy, and production information.
- Management Summary. The management summary will contain the background information of key personnel, their business achievements, and experience in the industry.
- Financial Plan. A detailed financial plan is crucial. Included in this section is source of funds, existing loans and liabilities, a monthly cash-flow analysis, and projected sales and costs. This will help you see the real costs associated with your business and how much you can really expect to earn.
Even if you won't be using an investor to help you fund your business, a well-planned, concise business plan can reduce the risks associated with starting a business. When financial stability, life savings, and other people's money are on the line, it is imperative you know exactly what you're getting into, and a business plan can help you do that.