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A Business Plan is Crucial for Any Business
A business plan is one of the most important tools of doing business. Not only does it lay out your vision for your company and its future direction and growth, it’s also a key component in obtaining financing and attracting investors. A business plan explains what your company does, how it plans to succeed and why lenders or investors should have confidence in its potential.
© Renjith Krishnan
The main purpose of a business plan is to raise money. If you don't have a solid business plan , no bank, investor or venture capital firm will consider providing you with the money you need to start up a new business, to expand an existing business, or capitalize on an opportunity.
But it's more than just a way of impressing lenders and investors. An effective business plan also ensures that everyone in your company understands the mission and is committed to the same goals and objectives. The business plan clarifies the business targets and develops a strategy for meeting those targets.
Contents of a Business Plan
All good business plans should include:
- Background, history and current structure of the business
- Details of your products and services, including future plans
- Breakdown of the market potential for your business (industry overview, target markets, competitors, market share)
- A marketing plan setting out the strategies you will use to reach your target markets
- The business' resource requirements
- A financial plan, including cash flow projections
- Information about the management team.
The business plan will also need an executive summary and appendices, which will include any relevant documents that are too bulky to go into the plan itself (such as leases, contracts, architectural plans, press releases, CV's of the company's principals, financial statements).
Reviewing and Updating Your Business Plan
Once you have written your business plan, it's advisable to have it reviewed by your lawyer and accountant. When you feel comfortable with the content and structure, make an appointment to review and discuss it with your banker. But it doesn't end there. The business plan is a flexible document that should change as your business grows. Be sure to review and update it every few years, or whenever your business model changes.
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