What is a Business Plan & Who Needs One?

A business plan is basically a written document that contains the map to your future. If you have ever taken a road trip, whether it was a few miles away or across the country, you likely searched for information about where you were going and the best route to get you there. Preparing a business plan is the same as a road trip. Without a clear idea of where you are going and how to get there, your trip may be cut short as a result of not planning ahead.

“A business plan, like a roadmap, will guide you to your destination and show the best route for getting there.” Jason Hope

How is a Business Plan Used?
A business plan shows you where you are starting, where your business will be in 3-5 years and what the ultimate goal is for the business. For example, do you see the business expanding in 10 years, perhaps branching out to possible franchises or do you have a plan for creating X amount of jobs inside the business? A well-designed business plan will perform a range of tasks, both for you and for the readers. It will be used as a guide for managing your business and to explain your goals and ideas to potential investors.

What’s Included in a Business Plan?
Basically, your business plan is used as an outline to convey your current and future business goals. A good business plan typically includes three main sections:

  • The business concept-in this section you detail the industry or niche of your business’, the business structure. It must include the product and/or service you will provide and what plans you have to make the business successful.
  • The Marketplace Section-this is the part where you will describe as well as analyze your potential customers. This information should include who your targeted audience is, where to find them and what reasons they have to buy your product/service. This section should also include your competition and what you/your business can/will do to beat out the competition.
  • The financial section-this section contains a statement regarding your current income and cash flow, what it will take to get the business off of the ground, what your planned outlook is for 1 year, 5 years and etc. This section may require you to utilize the help of an accountant and/or a reliable spreadsheet software program.

What Are the Key Components of a Business Plan?
In order for your business plan to thoroughly demonstrate your plans and goals, the above three sections are broken down into ten key components:

  • Cover page
  • Title page
  • Table of contents
  • Detailed summary
  • Description of the business
  • Marketing strategies
  • Competitive analysis
  • Plan for development and design
  • Plan for management and operations
  • Financial aspects

If you are considering starting a business, not starting a hobby or taking a second job, but planning a venture that requires money and time, and that you are expecting to earn a profit from, you should take the time to create some type of business plan. The length of business plans vary, depending on the nature of your business, intended financial assistance and what your future goals are. The good news is, there is a lot of help available to help you get started, including business plan templates. It is important to keep in mind that this is your business, your goals and your future, so it is essential that you do your research and have a good understanding of what you need to convey through your business plan.