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Definition
A business plan is a document that clearly communicates what your company does, identifies your goals, and shows potential investors how you plan on being successful. It will act as a road map, giving you an idea about what audience to target and how to go about doing it. Creating a business plan also gives your business focus so you can put all the puzzle pieces together and create a strategy and plan for how the company is going to succeed.
Major Uses of a Business Plan
Funding:
Often the primary purpose of a business plan, raising enough funds helps to minimize early problems of a startup company. By presenting a business plan to investors like angel investors, and venture capitalists, they can assess the potential of your company. The better researched, written, and presented business plans often receive the most initial investment.
Strategic Planning:
Strategic Planning is defined as a structured process of outlining an organization’s direction, vision, and overall business strategy. By performing many of the key elements initially proposed in a business plan, these strategic plans can go a long way towards shaping a business. Examples of Strategic Planning include SWOT Analysis and Operational Plans.
Major Sections of a Business Plan
Although there are variations of business plan layouts, the following categories are major sections that are found in almost all plans. They are often listed in the Business Plan Table of Contents, along with subcategories under each of the major sections.
-Market Analysis
-Industry Analysis
-Competitive Analysis
-Marketing Plan
-Operations Plan
-Management Team
-Financial Projections
Major Benefits of a Business Plan
1. Receive Investment
One of the most common reasons that entrepreneurs write a business plan is to raise funds from financial institutions like angel investors, and venture capitalists, and others. Before betting on you, they want to learn as much as possibly about your business. A business plan is an effective, and often required, tool that you can use to give investors all of the information they need and to demonstrate that you are a credible entrepreneur.
2. Examine your weak spots
When starting a business, it is easy to focus on some aspects of the company and forget others, especially if you are very strong in one area but weak elsewhere. By writing a complete business plan, you are forced to examine all areas of your business and build strong strategies that will prepare you for successful execution when launching. It will help you eliminate any grey areas in your business as it will force you to answer tough questions and provide specific information about your business.
3. Create a Framework
A business plan provides a framework of where you are and where you want to be by outlining certain action items, next steps and future activities. By revisiting and updating your plan every few months, you will be able to apply what you’ve learned through operations to your strategy and stay focused on your high level goals.
4. Enroll Strategic Partners
Many small businesses are unable to succeed by themselves and require skilled partners to jointly build their business. Most well-qualified potential partners will have many questions that must be answered before signing on. With a business plan in place, you’ll be able to communicate your high level vision, clearly articulate your strategy and show any potential partner where they fit into it all.
See also Marketing Plan
