Initial business plans are one of the most important steps in creating a successful company.
Business plans act as road maps for people starting their own business. In the process of creating a business plan, an entrepreneur examines nearly every aspect of his or her business. A well-written and comprehensive business plan demonstrates that the business's stakeholders have thought through any potential setbacks and have done the strategic planning necessary for a successful business start-up. A good business plan also helps illustrate the business's chances of making a substantial profit.
Just as a builder would not begin constructing a building without a blueprint, an entrepreneur should not rush into operating a business without a written plan. Drafting a business plan is the first step in managing a viable business operation.
According to the U.S. Small Business Administration, when writing a business plan, business owners should consider the following questions:
Individuals writing a business plan for the first time can glean much by studying the plans of established businesses, and a business plan-writing workshop may also offer valuable guidance. Experienced business plan writers are available for hire, but they are recommended primarily for businesses courting venture capitalist firms or seeking large amounts of funding. It is possible, however, to hire a consultant to review the business plan once it has been drafted. If a person decides to hire a writer or a consultant, it is important to hire someone with business plan-writing experience who can supply references.
Once the business plan is drafted, it is wise to obtain a second or even third opinion. Having one or two outside persons though preferably persons with business experience review the plan objectively and provide feedback will yield a stronger business plan. By having someone point out weaknesses in the plan before it is put into effect, the business owner may save both time and money.
The U.S. Small Business Administration states that though there are different ways to approach writing a business plan, plans typically comprise four basic components: a description of the business, the business's marketing strategies, pertinent financial data and management duties.
An effective business plan is jargon-free, easy to read and concise. AllBusiness.com recommends that written plans be no more than 40 single-spaced pages, not including any appendices. A successful business plan specifies favorable market conditions as well outlines the responsibilities of the management team. It is not overly technical and avoids divulging private information.
Existing business plans of businesses in the same industry can serve as a helpful point of reference for entrepreneurs developing a plan. Hundreds of free real business plans are available at Bplans.com. Though the company provides the business plans for free, it also sells software to aid in creating business plans. The software allows a user to modify an existing plan to reflect his or her business. If a writer decides to utilize this type of software program in drafting a business plan, he or she should be sure to highlight what makes his or her new business unique. It is smart for a business owner to seek to learn from competitor's strengths, but in order to succeed, the new business should also aim to improve upon its competitor's weaknesses.
The U.S. Small Business Administration lists the three main purposes of a business plan as facilitating planning, communication and management. Business plans aid in the long-term planning of new businesses, as the drafting process helps business owners identify potential roadblocks. Owners then have to come up with solutions for dealing with the issues. It is important for plan writers to realize that creating a business plan does not involve avoiding risks, but rather understanding and managing risks.
A business plan functions as a communication tool when seeking to secure loans, attract investors and possibly convince interested parties to become employees. When it comes to managing a business, the plan assists in monitoring the growth of the business and evaluating its status. For example, by comparing estimated timelines in the plan to the actual time taken to achieve certain goals, a business owner can measure the company's development. Over time, the plan can be modified as knowledge and business experience are gained.
Some businesses find it useful to have a mini-business plan, which is a two- or three-page version of the plan, to share with potential lenders, investors or employees. The full plan can then be made available for interested parties to review in detail.