While it may sound complicated, a business plan is nothing more than an organized outline of your idea of how your business is going to function. And experts agree: you need one.
“A business plan is like a road map,” explained James Jacobs, the retired president of a Dallas-based financial services firm and a SCORE (Service Corps of Retired Executives) advisor. “It’s a road map that helps you identify where you want to go and how to get from point A to point B.”
A business plan should include a variety of pieces and some will be more detailed than others depending on the kind of business you’re running and your reason for writing the business plan.
There are certain pieces of the business plan that are must-haves:
- Executive Profiles
- Business Summary
- Marketing Plan
- Income and Expense Projections
There are several resources available to assist you in creating a business plan. Business plan templates abound on the Internet, many for free. SCORE offers a comprehensive, free plan on its web site.
There are also a variety of books on the subject available at the bookstore, library or from your local Small Business Development Center (SBDC).
There are also business plan software programs — starting at round $100 — that will walk you through the process by asking you questions and generating a formal business report. The software is particularly useful for the financial portions of the plan.
“Unless you have a background in finance, that part of the business plan can be most difficult,” said Dolores Stammer, Regional Director of the New Jersey SBDC at Centenary College in Hackettstown, N.J.
Stammer strongly advised that future business owners approach the financial part of the business plan by breaking down their total sales expectations into individual sales.
“Once they see how many of something they need to sell in a week, they often realize their total revenue projection is impossible,” she said.
Knowing why you’re writing your business plan is also important, Stammer said.
“If you’re writing it because you’re going to apply for a loan , then you need to be very specific in the financials,” Stammer told BusinessNewsDaily. “If you’re writing it to keep yourself focused on your goals, then you should be clear about what those goals are.”
Regardless of who will eventually read your business plan, it’s essential that you know it intimately,” Jacobs added. “Be confident. Know your plan inside and out. And, don’t just do it once. You should be reviewing your business’ strengths, weaknesses, opponents and threats [what business strategists call SWOT] once a year."