Business Plan Basics
What is a Business Plan? A business plan is a blueprint of your company, presented in
standard business format that is logical and well documented. A good
business plan is also:
- A strategic vision of your company
- Your most important communication tool
- A document to obtain working capital and/or
- A tool for planning, measuring and improving
- A basis for sound decision-making
- A way to motivate employees
Why is a Business Plan important?
The Success of your business depends largely upon the
decisions you make. A business plan allocates resources and measures
the results of your actions, helping you set realistic goals and make
You may have asked yourself, Why should I spend my
time and energy drawing up a business plan? Remember, first and
foremost that lack of planning leaves you poorly equipped to anticipate
future decisions and actions you must make or take to run your business
Successfully. On the other hand, a sound plan can act as:
- A reality check. The
process of putting a business plan together, including the thought you
put in before you begin to write it, forces you to take an objective,
critical, unemotional look at your business project in its entirety.
- A performance tool.
Your written business plan is an operating tool which, when properly
used, will help you manage your business and work effectively towards
its Success. Your business plan will allow you to set realistic goals
and objectives for your company's performance, and, if maintained, will
also provide a basis for evaluating and controlling the company's
performance in the future.
- A message sender. The
completed business plan communicates your company's ideas and message
to employees, outside directors, lenders, and potential investors.
outside your company. A business plan helps you do that in an
organized, credible manner. Also, the process of planning helps you
determine if your vision is realistic, and tells you what you need to
do in order to achieve it.
- A motivation tool.
The development of your business plan is one of the best ways for you
to communicate how well you understand your business and describe your
vision of your business. Without proper planning, it becomes impossible
for you to get all of your employees reading off the same page of the
book and generating energy through high levels of team work. It is
impossible to motivate people when they do not know where they are
going or what they are trying to achieve.
- A management development tool. Putting together your business plan will help you develop as
a manager because it can give you practice in thinking and figuring out
problems about competitive conditions, promotional opportunities, and
situations that are or may be beneficial or harmful to your business.
- A road map. Your
business plan, once it is completed, will give you and your employees
goals and direction: a roadmap to follow in guiding your business
through good and bad times.
Three things a Business Plan must provide. More than anything else, a business plan must clearly
communicate your ideas and plans. To accomplish this, a plan
- Evidence of focus.
What one thing (or several things) do you do exceptionally well?
- Understanding of who your target customers are. Define or list your target customers.
- An appreciation of investor or lender needs. What are some of the needs of the lender? Of an investor?
Association of Women Business Owners, St. Louis, MO and
Online Women's Business Center, 5/97)
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