Writing A Business Plan

From LoveToKnow Business

Writing a business plan is vital for your company, providing focus for you and your employees. A solid business plan can help you garner needed loans and investments. Because it serves such an important purpose, business plans require much thought and preparation. But it is this deep thinking and preparation that serves you best as owner. Writing and reviewing a plan allows you to keep focused on what you need to do.

Writing Keeps You Focused

In essence, a business plan acts as a road map, guiding you back on track should you stray from the road. It’s easy to get sidetracked because as you gain experience, you’re tempted to go off on tangents as “opportunities” present themselves. But tangents can kill a business by diluted focus and stretching operating funds to a point where the link snaps and the business folds in upon itself and fails.

A Plan Must Remain Flexible

Writing a business plan provides you with avenues to zig should your market zag. A well thought-out plan prepares you for market shifts and changes, the impact of competition and changing technology. When you write, it’s impossible to factor in all the myriad factors that can occur as a business matures. But the business plan can help you control knee-jerk reactions to changing market conditions and bumps in the road.

Size Matters

A business plan should be just long enough and no longer. That means forget about the Great American Novel. For a homebased business not planning to seek external financing, 10 pages is good. If you plan to expand, add employees and perhaps seek financing from a local lender, then 20-50 pages should suffice. Add more if you’re going to seek investor cash. A good rule of thumb is length is directly proportional to the complexity of the business. All plans should be written in a language simple enough and clear enough that readers can quickly grasp where a business is going and what it needs to do to get there. An overblown vocabulary isn’t important. Clear thinking is, and the ability to communicate your passion, knowledge, skills and dreams.

Writing a Business Plan Inclusions

Business Description

This is a summary that can answer the question: what kind or type of business am I in? You must be able to answer this with a one sentence answer that summarizes everything you’ll do. You’ll use this as a tag line when meeting business people as you market your business or as an introductorily statement presented to a lender.

Structure

Define your business as a Sole Proprietorship, Partnership, C Corporation, S Corporation or Limited Liability Corporation. To accomplish this will require the skills and expense of a good attorney specializing in small business.

Management

You’ll need bios and resumes on your principal team players, including details of their experience, education, noteworthy achievements and why you‘ll think they will be an asset.

Employees

How many and how will you hire them? What qualifications are you looking for? Will you outsource? What about compensations, benefits, workman’s comp insurance or health plans?

Finances & Accounting

In house or subcontracted? Computerized? What software will you need? You’ll need a proforma profit and loss statement with income and profit projections forecasted out three years. What kind of a balance sheet method will you use? You’ll need three-year projections of assets and cash-flow. Will you outsource for expertise in this area? Who can you hire and who can recommend reliable professionals? How much will a qualified CPA cost you a year? What services will he/she provide?

Technology

What are your needs? How will you use your equipment and in what aspects of your business? What file databases are you going to maintain? How much power do you need to maintain these? Can you option for online vendors or do you have to install an in-house system,? What about IT? Outsourced or hired? What is you budget for upgrades of equipment and software? Will you be doing graphics and promotional materials design in-house or outsourced? What about spyware, malware and virus protections?

More Than An Afterthought

Writing a business plan that is comprehensive will require a lot of work and thought. But once it’s done, you’ll have a tool that can breathe and grow as your business grows.