Effective Business Planning: Definition, Purpose, and Help to Start Now
Business planning is the best way to document your company’s expenses, profits, and financial forecasts to share with potential investors. Startups usually develop a simple business plan, then update to meet individual company needs. Many small businesses work with a spreadsheet, and others use software and templates to maintain business plans. There are plenty of free and low-cost options to accomplish the task. We’ll share links to recommended plans and services to help you start the process.
The purpose of a business plan is to provide investors with information about the company’s past, present, and future. It also provides guidance for management on how to make decisions in order to achieve their goals. Your plan will likely change over time, but it’s important to track certain measurable numbers to make informed decisions when it comes to funding, hiring, expanding, selling, etc. Your company’s business plan is the roadmap to profitability and growth.
Read on to get a better understanding of the typical business plan and find links to write your plan now or get help from the experts.
What is a Business Plan?
A business plan is a written document that contains all the information to answer questions like “What will my business do?” “Why will my business succeed?” and “How much money do I need?”. An effective plan can be as basic or complex as necessary to create an accurate picture of the company’s progress, issues, and finances.
All plans should include the following information:
- Mission Statement
- Description of Product/Service
- Market Analysis
- Strategic Objectives
- Operational Objectives
- Financial Plan
What is the Purpose of a Business Plan?
The purpose of a business plan is to outline a company’s strategy for profitability and growth over time. If you apply for funding, investors want to see realistic goals and numbers to help them decide whether or not their investment is worth the risk. When you present financial projections and marketing strategies in writing, potential lenders can make decisions quickly. They’ll want to know how much you need to borrow, how long it will take to repay, etc.
A well-written business plan is a powerful tool that shows whether or not you can be successful with a particular business model. You can actually save a lot of time and money by working out a quick business plan before you register a company or make any other plans. Some business models simply are not profitable or just may not be the best match for your personality. It’s better to know before you start spending money. If you decide that you have a solid business idea, your plan will tell you how much funding you’ll need throughout the initial growth phase (future phases will be reworked as you go along).
Are Business Plans Important?
Business plans are important because they provide a clear path for your business to grow. They help you to identify the market need and how you can fill it. They also help you to identify your strengths, weaknesses, opportunities, and threats.
A business plan is not a set of rigid rules but rather a flexible document that will change as the needs of the business change. It is important to note that different types of businesses require different types of plans. important for companies because it helps them to organize their thoughts and goals. It also serves as a roadmap for what they want to achieve in the future. A business plan can be used internally by managers to make decisions or externally by investors when they are deciding whether or not to invest in a company’s project.
Who Needs a Business Plan?
Even if you never apply for funding, every business should document a plan. Jot down business ideas, products, designs, sales and marketing programs, pricing, etc. in an organized spreadsheet or template. Starting a business is exciting, but successful businesses are always looking ahead to the future and plan accordingly. If you want your company to bring in a million+ in revenue, you have to have a plan to make that happen. Every single company should have an active business plan.
Find the right business plan for your startup.
Writing a Business Plan
The process of writing a business plan takes place through several steps. You’ll want to 1) analyze your competitors, 2) research your industry, 3) identify your target market, 4) research your product or service and its potential markets, 5) determine your financial needs and resources available to you, and 6) create an action plan for achieving success. With these facts, you can decide on what kinds of products or services to offer and the market that would benefit from your offerings.
Helpful Resources
Writing a Business Plan from Scratch | New Business Ideas | Get Your Business Funded
Plan For Your Business Growth and Future
If they try hard enough, many people can – and do start new businesses. Some of them may start without a plan and even be successful to a degree. But the only way to real success and profits is by working with an effective business plan. You’ll have a visual chart of your progress, forecasts, and funding needs. When you can see beyond what your business is doing right now, you can make changes and plan for success before it passes by.
Find startup capital for your business idea
Your local bank or credit union can discuss traditional funding options like home equity loans and other personal funding options. There are plenty of online crowdfunding platforms like Kickstarter, Indiegogo, and SeedInvest to launch a funding campaign. Requirements vary by industry, and some of these platforms are better suited for particular businesses. A quick Google search shows a bunch of options to research.
TIP: Crowdfunding platforms usually charge fees for using their services. You’ll need to factor those fees into your funding request so they’re covered when you withdraw funds. For example, Claire’s Cleaning Crew starts a Kickstarter campaign to purchase their first commercial van. They need $50,000 after fees, so Claire needs to calculate the fees and add that amount to her funding request if she wants to collect $50k when the funding company takes their cut.
What Does a Good Business Plan Look Like?
Every business that wants to be successful needs to have an effective business plan. You know you have a complete plan if it includes an executive summary and mission statement, description of business and services, market and competition research, pricing, and financial forecast. An outline of goals and objectives will act as a roadmap to follow to growth and success.
Whether you fill in a basic template or hire a professional business planner, starting a business without a detailed plan can be both costly and close your business. There’s no sense in starting a company if you’re not prepared to stabilize and grow it. You can save a lot of time and unnecessary headaches by doing research and writing a business plan even before you make any real commitments. Numbers don’t lie, so it’s best to make an informed decision based on facts and numbers instead of emotion. A good business plan will show you exactly where your business has been and where it is going, so you can make profitable adjustments along the way.
Learn how to conduct a business audit in our guide.
Explore New Business Ideas and Start One Today
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