Reasons for Business Planning
Business planning is beneficial for all businesses. It is the tool that provides direction, serves as a marker and measures your success in achieving goals. A business plan gives you the information you need to make solid decisions, especially in today's rapidly changing world. With a plan, you are equipped to make the best purchases, whether it is a new laptop or a secondhand piece of manufacturing equipment. You are ready to meet the challenges of this competitive environment.
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Secure Funding
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Many businesses use a plan in an attempt to secure funding. Whether you are seeking a loan from the Small Business Administration, funds from private investors or even a short-term loan from your brother-in-law, a business plan details how you will achieve profitability and pay back the loan, with interest.
For existing businesses, include balance sheets and income statements from the past three years. Create a cash flow statement with 12 months of projections. Attach personal financial statements and federal income tax returns for each of the principals in the business. (See Reference 1)
Share Strategy
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Your business plan is a communication tool. It enables you to define what the business goals are and who is responsible for reaching them. Most important, it gives you a way to unmistakably explain these goals to your partners, managers and employees.
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Set Objectives
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Now that everyone has a clear picture of where the company is headed, you are able to set objectives for individual employees and measure their ability to complete their job. You may choose to pay employees a bonus based on their success in meeting these objectives. These objectives also provide impartial measures for counseling an employee who is working at a subpar level.
Grow Your Business
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Interested in growing your business? Whether you are considering a merger or acquisition or you wish to enter new markets, a business plan enables you to plan your strategy and gives you the information you need to make the best decisions. It also provides the information your accountant and attorney needs to best advise you.
Purchase Assets
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Purchasing assets is not a decision to be taken lightly. Without a clear understanding of your financial picture and market share, you may be poised to make a critical mistake when it comes to investing thousands of dollars in new assets. Tap into the wealth of information that your business plan provides. Invest the time in planning, and then reap the financial and lifestyle rewards that come from owning and managing a successful business.
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