A business plan is a document that thoroughly explains a business idea and how it will be carried out. The plan should include the following:
- The story of what the business is and will be,
- All costs and a marketing plan,
- Description of how the business will be financed, and
- An estimate of projected earnings
The foremost reason to write a business plan is to organize your thoughts before starting a business. Writing a business plan can be a daunting and time-consuming process. Even though creating a plan is a best practice, many entrepreneurs elect not to create one, often to their detriment. In fact, a well-written plan will guide you every step of the way as you develop your business.
Why do you need a Business Plan?
Whether you are planning a microenterprise with virtually no start-up costs or a multimillion-dollar venture, you will find a business plan an essential tool. No serious professional investor will agree even to see you unless you have put together a comprehensive, convincing business plan. A plan can also help you determine on paper whether your business is viable before you make mistakes in the real world—allowing you to adjust accordingly. It will force you to analyze markets and opportunities in realistic terms before you attempt to secure financing. The business plan is vital to current and proposed businesses as a guide to operations and direction, which can be modified as the organization evolves.
While you work on your plan, you will also be figuring out how to make your business successful. Before you serve your first customer, you will have answered every question you can think of. How much should you charge for your product or service? What exactly is your product or service? What is one unit of sale? What will your costs be? How are you going to market your product or service? How and where will you sell it? Figuring all this out in advance will save you time and money.