A business plan is not just a tool to get financial support in your business endeavor; a business plan is a written document that defines your business goals and describes the methods by which you will attain those goals. Writing a business plan forces you to review everything all at once. Your value proposition, marketing assumptions, and all your plans for operation, financial matters, and employees are written out clearly and concisely. By reviewing your business plan you will be able to make connections that you might not have been able to make without writing everything out. For example, you must consider how your staffing situation should reflect your projected customer base. Every small business owner should prepare a business plan but the truth is that many business owners do not, for varied reasons; developing the business plan takes a lot of time and energy, but in the end it is worth the effort.
As part of your business plan you lay out major marketing and operational milestones that you plan to achieve, as well as a general time table. The only person who is ultimately accountable for achieving those milestones is the entrepreneur, so the entrepreneur can use the business plan as a baseline for monitoring his or her own performance. The plan also lays out targets for employee performance; the business plan isn’t just a passive predictor, the business plan can become a way to set goals for your workforce as well as for the entire operation. Sales and expense targets, hiring positions and financing goals are all delineated in the business plan. Formulating a business plan forces the small business owner to think about where they want their business to go and how to get there. The business plan is like a road map to follow as the business grows and develops.
Your business plan is also obviously a fund-raising tool. If you ever intend to borrow money or establish credit, you will always be asked to produce a business plan. A loan proposal, which is a summary of the financial request, may be necessary as well.
Business plans are as varied as the businesses which they represent. There are some essential components that every business plan must have:
The mission statement is an essential component of any business plan. The mission statement is the description of the business, including what the products or services of the business are. This statement also encapsulates the driving force behind the business, and defines the reason that the business exists.
The operations management plan describes how you will manage the core processes of your business, including employment issues and human resources.
The marketing plan describes the target market for your product or service and also explains how you will reach that market.
The economic assessment is the complete profile of the economic environment of your business, including both internal and external factors. The financial management plan covers the internal factors, detailing the costs associated with operating your business and explaining how you plan on paying those costs. This portions also describes your financing needs. The external factors include competition, regulatory offices, and customer base.
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