In short, a business plan is a summary of a business, the goals and the future projections for the business. You may need this if you wish to acquire help with funding your business.
Is it absolutely required to have a business plan in order to run a business? No. Is it wise to create a business plan if you are looking for long term success from a business? Yes.
If you’re reading this, you’re probably thinking about starting a business or looking for ways to fund your business. Somewhere along the way you stumbled upon a need for a business plan. Now, you want to know what the heck is a business plan necessary and how to create one.
You’re in the right place.
What is in a Business Plan?
A standard business plan breaks down into 7 sections:
The executive summary; the purpose of this section is to summarize the whole business plan. Like a preview for a book, short and sweet. You want to pull the reader, who is usually a potential investor, in and gain their interest for your business.
The company description; this section tells the reader what the business is, how the business works, and the goals for the business. it would include details such as the legal structure of the business, the company history, an overview of your products/services, and summaries on business growth and current goals.
The products and/or services section. This section will go into detail about what you are selling, how it benefits customers, any relevant documentation, research and development for your products/services.
Market Analysis. This section illustrates your industry knowledge. It would include information about your target audience, your competitors, historic/current/projected marketing data.
Strategy and Implementation. The purpose of this sections is to describe your strategies that will be used to drive sales and further your business reach. You’ll also talk about how you will implement theses strategies.
Organization and Management. This section will outline the company’s organizational structure. It might include; organization charts with descriptions, information about the owner, or a breakdown of the management team and their duties.
Financial Plan and Projections. This section is all about the numbers; historical financial data and realistic financial projections based off that data.
Business plans can get quite lengthy and detailed depending on the nature of the business. It can be tough to put one together as a newbie, luckily, there are people willing to help you out one together for a fee. The amount of effort needed from a person to help you, will most likely determine the fee assessed.
You could also find business plan templates online, that could be used to build your specific business plan off of, for free. In order to be successful using that method, you’ll want to find a template in similar work field.
Why is a Business Plan Necessary?
Creating a business plan, to some, could be a task that requires a lot of effort. Like you, I sometimes need a little convincing before a do any work that could be perceived as extra and unnecessary. Developing a strong business plan can do a number of things that are beneficial for your business.
When you create a business plan, it’s shows a level of seriousness that you have for the business. Anybody can decide to start a business, anybody can also trial and error themselves into quitting something they just started. Only those, who are serious, will take the time to draw up a plan to carry out the actions necessary to ensure the success of the business.
Taking the extra time and energy to break down and summarize a potential business also allows you to be organized. It’ll better prepare you for the challenges associated with running a business.
Having a written business plan to visit, when at a lost on making decisions for your business, can provide clarity. The plan has the business vision and the short and long term goals for your business; taking the emotion, the impulse actions, and the instant gratification out of the equation.
The main reason most business owners and entrepreneurs create business plans are to attract investors to help fund the business. The business plan acts like a portfolio; it displays the business growth potential and the who, what, when, where and how of the business. It tells the investor what they could get from their investment, should they decide to move forward with investing.
Have you ever tried selling a friend or family member on an idea they don’t understand?
It can be very frustrating and even detrimental to the desired outcome. A business plan organizes and lays everything about the business out in detail, and in sections, objectively, for better understanding.
You could look at a business plan almost like a resume, in the sense that it should be ‘personalized’ based on the reader. Ultimately, the plan to summarize the business, however, a summary can focus on different areas of the business. In the same way, a resume can show a different set of experience, education, and so forth for the same candidate when applying for positions in different job fields.
Conclusion
You don’t need a business plan to be in business. However, having a business plan could be beneficial to you business in multiple ways. Not creating a business plan is like getting a new job and no training. Sure… you may succeed, but you could avoid a whole lot of mistakes made through trial and error.
A business plan is the gateway to business funding, organization, and development. In general, business plans breakdown into sections; company overview, market analysis, collected data, projected financials and so on. There’s really no reason not to complete a business plan unless it’s laziness or unreadiness. Why else leave free money on the table if your business could use it?
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