What Is A Business Plan?

A business plan provides a complete overview of your business goals, projected revenues and expenses on a short and long timeline. A business plan is most commonly used when seeking funding from venture capitalist and lenders like banks and credit unions. It allows any other individual or organization to develop a detailed understanding of what your business entails and how it hopes to be successful.

General Overview

A business plan describes in detail all aspects of your business from how it will function to who are its competitors. It provides a roadmap that any individual or business owner should be able to follow and successfully implement the outlined goals. When starting a business, there are many steps taken throughout the process. Before the doors to your business even open, you may need to obtain licensing by the state or city including certifications and registrations. Do you deal with suppliers and what are their terms for payment? Are you renting a space or operating out of your home? What is your expected tax burden likely to be for both state and federal agencies? What would you do in the event of a cash flow shortfall? Do you have employees and are they independent contractors? These and hundreds of other questions have to be asked and answered to have a successful business plan.

Specific Sections

If only creating a business plan were as easy as asking and answering a bunch of business related questions. Unfortunately it's not. A thorough business plan has a significant number of sections which all need to be filled out in detail. While this is inevitably quite helpful for the business owner, it is required when seeking initial or additional financing from lenders. A competitor analysis for example shows an evaluation of the competitive landscape including how many there are and what they charge for their product or service. A marketing plan details what type of advertising budget has been allocated and in what areas it will be used.

• Cover page and table of contents
• Executive summary
• Business description
• Business environment analysis
• Industry background
• Competitor analysis
• Market analysis
• Marketing plan
• Operations plan
• Management summary
• Financial plan
• Attachments and milestones

Summary

The length and scope of your business plan will vary based on the type of business you're starting and its goals. Nonprofit organizations run by a single individual will have a significantly smaller business plan than a corporation with a management structure funded with venture capital money. That said, all business plans should be thoroughly researched and well thought out. A business plan doesn't just show a thorough understanding of what you're trying to accomplish but considers all possible outcomes and obstacles which may arise in the future.