What Is the Importance & Purpose of a Business Plan?
Creating a good business plan is often the first step in starting a new business. According to the U.S. Small Business Administration, the business plan exists as a document that captures the details of your proposed business and is a sales tool for the business owner when applying for outside funding such as small business loans and grants. The business plans shows the lender that you have done your homework in regards to realistic expectations when starting up your company. The business plan serves as a single reference document to outline the business goals, marketing plans and financial objectives of the business.
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Importance and Purpose of Finance Section
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Lenders may not even consider working with you if you do not have a thorough business plan. It is often required as supporting documentation with your loan or grant applications. The more information the business plan contains about financial profitability potential, projected cash flow and earnings, expenditures and net worth, the bigger the financial picture. Include pricing information for your business's products and services, citing research to support your proposed pricing, in your business plan.
Importance and Purpose of Executive Overview
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The introductory sections of your business plan should include a description of your products and services and an overview of your company goals. This section will clearly outline, in lay language that anyone reading the plan can understand, what your company has to offer. Translate technical terminology to everyday language. Starting this section with a mission statement will help to explain, in a sentence or two, the nature of your business goals. Include general business objectives and goals such as "Objective is to create a wedding photography business in the greater Baltimore vicinity." After reading this section, it should be clear to the reader what your business plans to offer.
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Importance and Purpose of Marketing Section
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The business plan must include a market analysis and marketing plan. This section is important to show you have researched local competition to determine a need in the area. Include research on area population demographics and similar company location and pricing. This will help you determine your target population and location. The marketing plan shows how and where you plan to market your business. Details plans for print materials, website, advertising, contracting possibilities with other vendors and other sales strategies.
Legal Aspects
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The written business plan will help shape your ideas and goals as well as force you to complete research on insurance requirements, licensing requirements and state and federal regulations. Depending on the type of business, these will vary. For example, for a restaurant, licenses are required and state and federal laws may dictate kitchen design and safety. Information about how you plan to comply with requirements and regulations should be included in the business plan. This initial research and documentation will save headaches in the future if properly completed.
Format and Templates
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Business plans should follow a conventional format so they are easy to understand and follow. Websites such as bplans.com, as recommended by the U.S. Small Business Administration, provide sample business plans. These plans, downloadable for free, are effective templates for a good business plan. Designed for a variety of business types, these templates are customizable to fit the specific business. Reviewing sample plans will help to see good business plan structure and the need for specific sections. Score, a resource partner with the U.S. Small Business Administration, provides templates and advice for writing the business plan as well.
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