Business Planning Basics |
Writing the Business Plan |
Using the Business Plan
Business Plan Basics
A business plan precisely defines your business, identifies your goals, and serves
as your firm's resume. The basic components include a current and pro forma balance
sheet, an income statement, and a cash flow analysis. It helps you allocate resources
properly, handle unforeseen complications, and make good business decisions. Because
it provides specific and organized information about your company and how you will
repay borrowed money, a good business plan is a crucial part of any loan application.
Additionally, it informs sales personnel, suppliers, and others about your operations
and goals.
Plan Your Work
The importance of a comprehensive, thoughtful business plan cannot be overemphasized.
Much hinges on it: outside funding, credit from suppliers, management of your operation
and finances, promotion and marketing of your business, and achievement of your
goals and objectives.
"The business plan is a necessity. If the person who wants to start a small business
can't put a business plan together, he or she is in trouble," says Robert Krummer,
Jr., chairman of First Business Bank in Los Angeles.
Despite the critical importance of a business plan, many entrepreneurs drag their
feet when it comes to preparing a written document. They argue that their marketplace
changes too fast for a business plan to be useful or that they just don't have enough
time. But just as a builder won't begin construction without a blueprint, eager
business owners shouldn't rush into new ventures without a business plan.
Before you begin writing your business plan, consider four core questions:
- What service or product does your business provide and what needs does it fill?
- Who are the potential customers for your product or service and why will they purchase
it from you?
- How will you reach your potential customers?
- Where will you get the financial resources to start your business?