Why Do You Need a Business Plan?

First you come up with a business idea but you are not sure whether and how you should proceed. Through the preparation of a business plan, you will have to take an unemotional look at the business idea, evaluate the market potential, define how much capital you will need, and map out an operative game plan.

The business plan will help you take the idea to the next level, and eventually implement the idea into actual business practices. A well-written business plan will determine the feasibility of a project and lay out the actions necessary to complete the project.

2. A business plan is a communication document

You will probably need to borrow money to start the business but how do you convince friends, family or banks to lend you the money? The business plan will help you communicate your business idea to others. The lenders' decision on whether to extend your credit will be based on the information they get out of your business plan.

3. A business plan helps you successfully manage your business

Once you start the company, you should still use the business plan as a guideline for your company's daily operation. One major reason for failure of new businesses is lack of planning. The best way to enhance your chances of success is to plan and follow through on you planning.

Internally, your business plan can be used to communicate to your staff the goals of the business and how the firm operates. This will help them define their role in the business and may improve the efficiency of operations. It should certainly improve the coordination among various sections of your company.

4. A business plan increases your chances for success

The importance of planning cannot be overemphasized. By taking an objective look at your business you can identify areas of weakness and strength, pinpoint needs you might otherwise overlook, spot opportunities early, and begin planning how you can best achieve your business goals.

Your business plan can help you avoid going into a business venture that is doomed to fail. If your proposed venture is marginal at best, the business plan will show you why and may help you avoid paying the high tuition on learning about business failure. It is far cheaper not to begin an ill-fated business than to learn by experience what a business plan would have taught you at the cost of several hours of concentrated work.

Your business plan also helps you see problems before they grow large and helps you identify their source-thus suggesting ways to solve them. Your business plan will even help you avoid some problems altogether.

In summary, after preparing a business plan, the management team should have before it an agreed program for action and results to which it will willingly commit itself. After reading the plan, potential lenders or investors should know precisely what the management intends to do with the human and financial resources called for in the plan.

How do you write a business plan?

A business plan typically includes the following sections. We will describe each of the following sections in greater details and guide you through the business plan writing process step by step.

A. Executive Summary
B. Description of Business
C. Market Analysis
D. Operations
E. Marketing Plan
F. Financial Plan
G. Management Team