If you don’t know where you are going, you will end up somewhere else!

Suppose you lived in New Hampshire and wanted to drive to Texas, would you use a map?  Of course you would.  Starting or running a small business without good planning is like taking a 2000 mile road trip without a map.  You might make it to your destination, but it wouldn’t be easy.  Business planning will show you your destination and the best road to get you there. 

There are several reasons why planning is important.

First…. It gives you a path to follow.  A good business plan is a blueprint for making your future what you want it to be.

Second…. A business plan is the best tool available to help a business raise money.

Third…. The business plan is a guide for the owner and a communications tool for possible investors, suppliers, employees and others interested in the business.

Fourth…. If you don’t plan for the success of your business, you will likely fail. 

The business plan is a written document that clearly outlines the goals of a business and describes how, such goals will be achieved.  Simply put, a good business plan tells a story. 

The story will describe what a business does, why it is doing what it does, how the business will operate, why it will be successful and how it will be profitable.

A business plan does not have to be complicated, long or professionally drafted. Many very effective business plans are developed by first-time entrepreneurs and are less than twenty pages in length. 

Remember, there is a lot of free assistance available to help you develop an excellent business plan.  More about available assistance at the end of this section….. 

A business plan is a blueprint, a guide to help you succeed in business.  Every business should have a plan. 

Even if you are just thinking about starting a business, you should prepare a draft or preliminary plan to help you to determine if a specific business is feasible.

However, a business plan is a must for businesses that are in the “just starting” phase or businesses that are “currently in operation.”    

Before you begin drafting your business plan, consider four core questions:

1. What service or product does your business provide and what needs does it provide?
2. Who are the potential customers for your products and services and why will they purchase them from you?
3. How will you reach your potential customers?
4. Where will you get the financial resources to start your business?

A business plan should be a work in progress. 

There is no hard rule regarding the components of a business plan.  Good business plans have taken many forms.  However, a well written business plan will typically include the following parts.

Executive Summary

• One page summary of the key points in your plan.

Business Description

• Business name, address and owner information.  Also, include a brief description of the business, as well as specific business goals and objectives.

Products and Services

• Descriptive explanation of all products and services.

Market Analysis and Sales

• Description of the market for your products and services; explanation of how you will be competitive; and a specific discussion of your marketing efforts to generate sales.

Operating Requirements

• Explanation of how your products and services will be produced and made available to customers.

Management Profile

• Identify key personnel and include resumes showing relevant skills, experience and education.

Financial Management

• Include vital financial schedules that will help guide the business. 
• If you are just starting a business your plan should include: projected start-up costs; expected return on investment (ROI) for the first year; projected income statement and balance sheet; and, projected monthly cash flow for the next twelve months.
• If you are a new or established business your plan should include income statements and balance sheets for the last two years; projected income statement and balance sheet; and, projected monthly cash flow for the next twelve months.

Attachments

• Include supporting documents such as brochures, franchise agreements, business licenses, lease agreements, legal documents and other pertinent information.

Preparing a good business plan is one of the most important things an entrepreneur can do.  Much assistance is available.