What is a Business Plan and Why Do I Need One?

What is a Business Plan?



– Marketing Plan: What is your sales/marketing strategy?
Some common plan types include:
– External Plan: this is considered the “standard” plan and its main objective is to convince investors to fund the business. It should thus be well polished and pay close attention to language and formatting. Additionally, since cash flow is the most important issue for the investors, the plan should focus heavily on how funds will be distributed, used, and what profits will arise and when. A strong emphasis should also be placed on the team members and how they will contribute to the business operations.

Why do I need a Business Plan?

Besides the reasons that can be surmised from the above discussion, a business plan can be very vital for the following reasons:

A business plan is often required to barrow money for a business. Banks and other types of lenders may require a business plan as a part of the loan application process. In addition, a bad business plan or one that is missing key points may cause a loan to be denied.

A business plan can help you decide what resources and assets you need, and whether you should lease or buy them. A well thought out business plan should present concrete ascertainable and realistic goals and time frames. With this information, you can better plan what materials, supplies, furniture, office space, etc. you will need in the short and long term.

A business plan can help you set a budget and let you know when if you are getting off track. When you have real numbers and the business plan laid out in front of you can quickly see what is working and what needs improving. Maybe you will see that your plans are too ambitious and that you need to adjust your business plan and hiring to accommodate the market. And this in its self can lead to long term business success.

A business plan can help you establish goals and objectives for yourself, managers and sales people. A good business manager will set specific goals and objectives and then track the result and follow up. Without a business plan is it nearly impossible to establish what is supposed to happen and to determine how well things really went or how far the goal was missed. There is a tendency to just do business planning in the head. The problem with this is that the goals and plans have a tendency to morph daily depending on how the week is going and this does not instill standards or discipline in the business organization. A good business manager will have a written business plan that can be shared with investors, the bank, managers and sales staff.

A detailed and specific business plan helps you truly understand your business and to communicate it to others. Most business owners start a business with a good general understanding of the field they will be working in but fail to account for many things such as insurance, taxes, hiring, etc. A well written business plan will be very helpful in determining what areas of the business need more consideration and planning.

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