Why write a business plan?
Imagine departing for an unknown vacation destination without the use of a road map. This association is similar to a business person who is attempting to either start or operate an existing business without any idea of how to develop the business.
What is a business plan?
A business plan is a written narrative with financial and marketing projections. The plan describes the goals of a new or existing business and how the goals will be accomplished within a certain period of time.
What is the purpose of a business plan?
First and most important, the business plan is used by management and employees to guide them in the operation of the business. Second, the business plan introduces the company to potential investors and inform stakeholders to what the business will accomplish.
How many businesses prepare business plans?
According to the 2002 Inc. magazine top 500 businesses, only 40% of those businesses had a formal written comprehensive business plan before launching their business ventures. If the remaining 60% had developed a business plan before starting the business, would they have been more successful? New entrepreneurs state the daily challenges and pressures of starting and running a company leaves them little time for planning. However, more than 55% of new start-up businesses fail during the first year and a majority did not have a business plan.
Why is a business plan important?
A well-written business plan is important for several reasons. First, a business plan is an internal document helping a new or existing business identify its operational model and solidifies its goals. A business plan acts as an important road map for the management team and employees. Second, the business plan is a selling document of how a company is planning to meet its goals and objectives. It provides a mechanism for a young company to present itself favorably to potential bankers, investors, venture capitalist, suppliers, business partners, and key personnel candidates. A business plan helps a company establish itself from the crowded competitive business world. A business plan immeasurably improves the chances of getting funded. A formal development of a business plan demonstrates the dedication of the owner and or manager.
What are the types of business plans?
1. A Summary Plan – 10 to 15 pages. This plan is for companies who are in the early developmental stages and are not prepared to write a full plan. It may also be used when applying for a loan.
2. A Full Business Plan – 25 to 40 pages. This plan is written to identify the company’s operational plan with more details than a summary business plan. Usually, it is written and developed to assist new or existing businesses who are seeking funding from specific investors.
3. An Operational Business Plan – 40 to 100 pages. This plan is a detailed day-to-day operational plan primarily used for an internal audience: the owner, manager, employees, and current investors.
How do you write a business plan? If you decide to write a business plan, purchase a useful software program such as “Business Plan Pro,” “Automate Your Business Plan,” or other programs sold at your local office supply store.