Business Plan Basics
What is a Business Plan? A business plan is a blueprint of your company, presented
in standard business format that is logical and well documented. A good business plan is
also:
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A strategic vision of your company
Your most important communication tool
A document to obtain working capital and/or investments
A tool for planning, measuring and improving performance
A basis for sound decision-making
A way to motivate employees
Why is a Business Plan important? The Success of your business depends largely
upon the decisions you make. A business plan allocates resources and measures the results
of your actions, helping you set realistic goals and make decisions.
You may have asked yourself, Why should I spend my time and energy drawing up a
business plan? Remember, first and foremost that lack of planning leaves you poorly
equipped to anticipate future decisions and actions you must make or take to run your
business Successfully. On the other hand, a sound plan can act as:
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A reality check. The process of putting a business plan together, including the
thought you put in before you begin to write it, forces you to take an objective,
critical, unemotional look at your business project in its entirety.
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A performance tool. Your written business plan is an operating tool which, when
properly used, will help you manage your business and work effectively towards
its Success. Your business plan will allow you to set realistic goals and objectives
for your company's performance, and, if maintained, will also provide a basis for
evaluating and controlling the company's performance in the future.
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A message sender. The completed business plan communicates your company's
ideas and message to employees, outside directors, lenders, and potential investors.
outside your company. A business plan helps you do that in an organized, credible
manner. Also, the process of planning helps you determine if your vision is
realistic, and tells you what you need to do in order to achieve it.
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A motivation tool. The development of your business plan is one of the best ways
for you to communicate how well you understand your business and describe your
vision of your business. Without proper planning, it becomes impossible for you to
get all of your employees reading off the same page of the book and generating
energy through high levels of team work. It is impossible to motivate people when
they do not know where they are going or what they are trying to achieve.
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A management development tool. Putting together your business plan will help
you develop as a manager because it can give you practice in thinking and figuring
out problems about competitive conditions, promotional opportunities, and
situations that are or may be beneficial or harmful to your business.
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A road map. Your business plan, once it is completed, will give you and your
employees goals and direction: a roadmap to follow in guiding your business
through good and bad times.
Three things a Business Plan must provide. More than anything else, a business
plan must clearly communicate your ideas and plans. To accomplish this, a plan should
include:
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Evidence of focus. What one thing (or several things) do you do exceptionally
well?
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Understanding of who your target customers are. Define or list your target
customers.
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An appreciation of investor or lender needs. What are some of the needs of the
lender? Of an investor?