Although most new companies do not write a business plan, it is a valuable step for an operation of any size and type. Business plans serve a variety of purposes. Composing a business plan permits you to discover overlooked details in the early stages of developing a business concept.
In addition to providing a complete outline of your business for lenders and investors, a business plan defines the objective for your company and how it will succeed in its market. The initial sections of your business plan should identify exactly what your business does and describe the market it serves.
Don’t forget to identify competitors and how your company intends to differential itself from the competition. Be sure to gather plenty of specific data. Draw upon that information to explain the feasibility of your business.
The concept for your business must be finely developed to meet actual market conditions. Assess the economic environment in your industry. Don’t depend only upon having a unique product or the lowest price. Demonstrate specifically how your company will get noticed. Describe your marketing plan. State your plans for expansion but place reasonable limits on long-term projections. Maintain some flexibility in your long-range planning. Focus mostly on specific short-term goals that can be monitored for achievement.
The primary component of success for any new corporation is management. Identify the strengths of the management team and the qualifications of key positions planned for the near-term. Provide factual biographies of all key management personnel. Match prior experience of these individuals with their duties in the new corporation. If there are any gaps in required skills among management, explain how the company expects to overcome these deficiencies.
Focus on what you do well but avoid excessive optimism. Address likely strategies in the event of potential setbacks. Provide projections that conservatively predict revenue and don’t underestimate costs. Provide an optimal amount of capital required for adverse circumstances.
Use a one-year or two-year cash flow projection to reflect the utilization of capital that achieves success. Narrative in this section should connect the financial achievements to attained objections addressed earlier in the business plan.
A business plan is a tool to help you focus on what you are going to do. By the time you finish your business plan, you will be better prepared to incorporate and grow your business.