Develop a Business Plan

Developing A Business Plan

Overview

The importance of planning should never be overlooked. For a business to be successful and profitable, the owners and the managing directors must have a clear understanding of the firm's customers, strengths and competition. They must also have the foresight to plan for future expansion. Whether yours is a new business or an existing business in the process of expanding, money is often an issue. Taking time to create an extensive business plan provides you with insight into your business. This document can serve as a powerful financing proposal.

This article will take you through the step-by-step process of developing a business plan. A business plan is very specific to each particular business. However, while each business needs a unique plan, the basic elements are the same in all business plans. To complete an effective business plan you must dedicate time to complete the plan. It requires you to be objective, critical and focused. The finished project is an operating tool to help manage your business and enable you to achieve greater success. The plan also serves as an effective communication tool for financing proposals.

At the completion of this exercise, you should be able to:

Describe the importance of a business plan

Identify the elements of an effective business plan

Write a business plan

Outline:

Why Write a Business Plan?

Who Should Write the Business Plan?

Business Plan Components

Executive Summary

The Product/Service

The Market

The Marketing Plan

The Competition

Operations

The Management Team

Personnel

Financial Data

Supporting Documentation

Summary

Resources

I. Why Write a Business Plan?

Why should a business go through the trouble of constructing a business plan? There are five major reasons:

The process of putting a business plan together forces the person preparing the plan to look at the business in an objective and critical manner.

It helps to focus ideas and serves as a feasibility study of the business's chances for success and growth.

The finished report serves as an operational tool to define the company's present status and future possibilities.

It can help you manage the business and prepare you for success.

It is a strong communication tool for your business. It defines your purpose, your competition, your management and personnel. The process of constructing a business plan can be a strong reality check.

The finished business plan provides the basis for your financing proposal.

Planning is very important if a business is to survive. By taking an objective look at your business you can identify areas of weakness and strength. You will realize needs that may have been overlooked, spot problems and nip them before they escalate, and establish plans to meet your business goals.

The business plan is only useful if you use it. Ninety percent of new businesses fail in the first two years. Failure is often attributed to a lack of planning. To enhance your success, use your plan! A comprehensive, well constructed business plan can prevent a business from a downward spiral.

Finally, your business plan provides the information needed to communicate with others. This is especially true if you are seeking financing. A thorough business plan will have the information to serve as a financial proposal and should be accepted by most lenders.

Back to Outline

II. Who Should Write the Business Plan?

You, the owner