How to Write a Business Plan
If you are starting a new business, trying to obtain funding or find investors for an existing business, or hoping to undertake a new project at your business, you need a business plan. A business plan is a road map for your business or project. It tells the world who your business is and what you want it to accomplish.
Fortunately, writing a plan is simple:
- Begin by listing your company name
- List your mission statement/purpose
- List the short term goals (and perhaps long term goals) of the business or the current endeavor you are thinking of undertaking
- Include an income statement - This is an accounting document that shows how much income your business has from all sources (both current and projected income)
- Include a current balance sheet - This is another accounting document in which you list assets (things the business owns, accounts receivable, cash, etc.) and liabilities (money the business owes and obligations it has, such as a contract to deliver goods)
- Include a projected balance sheet - If things are going to change and/or you are starting something new, you should include this to show the projected income and the projected liabilities of the new project
- A cash flow analysis - This is a summary of money that is going to come into the business and money that is going to go out of the business
- An analysis of potential risks and pitfalls and solutions
You may want to get help from an accountant at preparing some of the aspects of the business statement. The Small Business Administration can also provide you with helpful guidance for writing a business plan. Their website even includes a step-by-step guide.
You will also need to make sure you have all the data available and that you have thoroughly done your research before writing.
What Is a Business Plan
The concept of a business plan varies slightly from person to person. Some describe a business plan as a resume for your business, while others describe it as a series of business projections, and still others describe it is a blueprint for a business.
In reality, a business plan should be all of these things. It should:
- Explain the mission statement of the business, or of the particular project the business is undertaking
- Explain who and what your business is and what it does
- Set goals
- Establish a plan of action
- Project costs and create estimates
- Anticipate profits
- Identify potential problems and solutions that may arise
Purpose of a Business Plan
Many people don't prepare a business plan until they are asked for one. For example, they may be seeking a loan and they may need the business plan for documentation and to prove to the bank they need money. They might have a meeting with potential investors that want to see what the business is all about.
While these are all good reasons to create a business plan, it shouldn't be the only reason. A business plan should be created early on in the business - sometimes even as the first step to starting the endeavor.
The reason to create a business plan early is so you can work towards accomplishing your specific goals and understand what you want form your business. For example, you may know that you want to do something with dogs and dog care. However, you need to make sure your business ideas are narrowly tailored enough for you to be successful: do you want to do grooming, pet sitting, doggy play dates, vet care, dog walking, or something else? Trying to do too many things at once can muddle your brand image and can result in you becoming overtaxed -financially and otherwise- and risk your chance of success.
A business plan can also help you determine your businesses priorities and how you will handle problems, so when situations arise you will know what to do and be guided by the plan.
Finally, it can help you identify any potential problems before they arise and force you to consider whether a given endeavor will truly be profitable by running the numbers.
If you take all those steps, you can write a successful and professional business plan.