A Business Plan is a written document which develops and details the potential of a new business as well as the knowledge and the credibility of the author/owner. It is the roadmap the business will follow as it becomes established and opens for business.
When a small business person launches a business without the simplest of business plans, too many variables are left to face when things don’t go as planned.
The business plan does a number of things:
- It proves that the author has the drive and the knowledge to put the plan together. (Tip, your mentor, business partner, funder, family, etc. will take you much more seriously with a business plan in hand).
- It points out to the author (you) what he or she does not yet know about the business, usually finance and/or marketing, and compels them to learn it or seek out resources to support their knowledge.
- It shows the reader (banker or see above?) that the author understands all aspects of the business and is prepared to operate in a professional, ethical, and credible manner.
- And, finally, it indicates to the lenders (if you rely on financial support from anywhere) that the owner and the business have the character, ability and desire to pay back a loan on time, every time. (Bankers like that.)
The best business plans are those completely written by the new business owner since you are the one in need of all of the information the plan develops (and the one who knows the most about your business.
A good business plan should honestly and completely present the following:
- Cover Page – company name, author and contact information (especially in formal presentations)
- Table of Contents – because no two business plans are quite the same and 60 pages can get cumbersome for anyone
- Executive Summary – normally just two short paragraphs to describe the business and what the plan is for. (Do this last; by then you’ll have language to describe it succinctly).
- Description of the Business – include your mission statement, company goals, objectives and philosophy, business model structure, and relevant business history, if applicable.
- Description of Major Products or Services Offered – here you want to “sell” your special sauce – the advantages, disadvantages, pricing, etc., in detail. Suppliers lists, sales literature, marketing plans, competitive analysis, and financial forecasts may be added as appendices.
- Operations Plans – describe how your business will run. Define layouts, inventory, hours, equipment and labor needs and how they will help you reach your desired outcomes.
- Marketing Plans – examine your industry and your niche to determine who your customers are, your competition’s good and bad points, details of the where, how, costs and timing of your marketing and events, and define your messaging and measurements of success.
- Management and Personnel Section – describe the owner’s background and experience, and define others by title. Discuss staffing needs to meet your goals, and where you’ll find staff.
- Financial Statements – as appropriate for the size and scope of the business provide documentation such as startup expenses, cash flow, breakeven point, profit margin, profit & loss, balance sheet, pricing calculations, owner’s personal financial statement, and any others that your financial institution can use to help you achieve financing (if and when you need it).
- Appendices – contain key supporting documents, drawings, contracts, sales and other literature, which have been referenced and supporting points made in the text.
About How Long is a Business Plan?
- Summary Plan – from a few to 15 pages. Used for startups, bank funding, crowdfunding, more modest investment needs, and smaller companies.
- Full Plan – 20 to 50 or more pages. For major financing, manufacturing companies, and more complex businesses.
- Operational Plan – Used internally to guide a company and its management on major new product developments, etc.
Learn more from SCORE https://www.score.org/resource/business-plan-template-startup-business.