A business plan is a valuable tool that helps you define your business, identify your goals, and provide invaluable guidance to make good business decisions. Putting your plan in writing forces you to review all aspects of setting up and operating your new business.
What is the purpose of a business plan?
A business plan is a tool with three basic purposes: communication, management, and planning.
- As a communication tool, it is used to attract investment capital, secure loans, convince workers to work for you, and assist in attracting strategic business partners. A comprehensive business plan shows whether or not a business has the potential to make a profit. It requires a realistic look at almost every phase of business and allows you to demonstrate that you have worked out foreseeable problems and decided on potential alternatives before actually launching your business. If you are going to borrow money, a good business plan is a crucial part of any loan application.
- As a management tool, the business plan helps you track, monitor, and evaluate your progress. The business plan is a living document that you will modify as you gain knowledge and experience. By using your business plan to establish timelines and milestones, you can gauge your progress and compare your projections to actual accomplishments.
- As a planning tool, the business plan guides you through the various phases of your business. A thoughtful plan will help identify roadblocks and obstacles so that you can avoid them and establish alternatives. Many business owners share their business plans with their employees to foster a broader understanding of the direction of the business.
An effective business plan can give you specific and organized information about your business, analyze the competition, determine marketing strategies, identify necessary funding, and determine how you will repay borrowed money.
How do I write a business plan?
There is no right or wrong formula for developing and creating a business plan. The best business plan is the one that helps guide you through the process of proactively setting up your business.
There are a lot of tools to assist you in creating a valuable business plan that can guide your business. To get you started:
- Bplans.com is an excellent website that provides you with hundreds of free examples of business plans across various industries. Be sure to check this site out before investing in any additional software to create your business plan!