Every business would benefit from an effective business plan.  If you are starting a business, growing a business, launching a new product or purchasing an already existing business, doing a business plan can save you thousands of dollars, and a lot of hair pulling and head scratching.

Someone once explained that a business plan is like the runway and your business is the plane.  When you are still on the runway, you can change your mind and not take off, but once you get airborne, it’s too late to stop without a lot of damage.  Here are some of the most common reasons for a business plan;

  • Gives you enough information so you can decide whether or not to go ahead with the business.
  • Helps to secure financing.  This could be part of a loan application or a presentation to venture capitalists.  Lenders want to know that you know what you’re doing and that you can repay them back with interest.
  • Allows you to identify issues and potential traps before they occur.  There has been many business ideas that sounded great at first, but after a detailed business plan it was evident that the idea is not profitable and should more of a hobby than a business.
  • Sets a schedule of milestones and keeps you on track.  Launching any new business venture is a huge undertaking and without an organized plan of action, things get messy very fast.
  • Helps improve your chances.  You’ve probably heard that the success rate of new businesses is dismal at best.   A well thought out business plan helps improve your odds of ending up in the “still open” part of the statistics curve.

Here are a couple of quick things your business plan should have;

  • What is the demand for your products or services
  • How does your product or service stands out in the market place.  What competitive advantage do you have that would allow your business to succeed.
  • What experience or training does the management team have that will ensure the business will be managed properly.  This is even more important with investors as they are more likely to invest in highly skilled founders than just a good business idea.
  • Your marketing and sales plan
  • Realistic and profitable projections

A business plan, if done right, can be a useful and often vital tool in the successful start-up of a business.

 

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