You Need A Business Plan
You want to start a business – or expand your existing business. You have a great idea, super attitude and the entrepreneurial spirit. So you head down to your local bank; you sit down in front of the credit manager and start to explain this brilliant idea when she interrupts you, “That sounds great, but where is your business plan?”
This scenario is played out every day, People with ideas – in many cases good ideas – who want to plunge into the business without having even done the business plan. This article is to explain in simple terms the concept of the business plan and to show you how to put your own plan together.
Why do a Business Plan?
You should do a business plan for a number of important reasons. Some of those reasons include:
• Your own thinking process is solidified through the planning process. The planning outline leads you through a series of questions and issues that you may have forgotten about when just thinking about your business.
Remember that you are an investor in your own business. You are the first person who must be convinced of the validity of your business concept.
• Your bank will need to be convinced of the viability of your business, or your business expansion. The business plan is a communications tool. Inform and influence the reader towards some action – providing a
loan, extending credit or investing in your business.
• Your business plan provides some guideposts in running your business. You will set goals and then, once you
are in business, you can measure those goals against the actual performance. Goals should be specific, measurable, achievable, realistic and time limited – SMART.
Your business plan has three elements. It prepares you – the entrepreneur for starting the business.
It explains your business and proves the viability of the business to outside parties. It spells out your business goals in clear SMART terms.
What is in a business plan?
There are as many kinds of business plans as there are kinds of businesses. There are dozens of planning guides and planning outlines, books, audio tapes, computer programs and online planning services. All of them have things in common and all have differences. (In researching this publication, the author never ran across two business planning outlines that were identical.) The business outline presented here is very simple. It has a reader friendly flow. It is not written in stone. If there are areas you need to add, then add them. If there are areas that need to be deleted, then delete them. If you are writing for a bank, then find out which sections are
important to the bank. Most banks have excellent information on getting a business loan.
The reader reads what the writer writes You cannot assume that the reader of your plan knows anything beyond what you have stated in the plan. You may know what you mean. The question is have you clearly explained it to the reader? As you go through this outline, constantly ask yourself if you are making yourself clear to a reader who is not familiar with your industry or your business. Your business plan is often your only representation to an outside party such as the bank!
Here are a few tips on the actual writing of
the plan:
To Do
• Try to keep it under twenty pages, exclusive of the appendix.
• Use bullet points and numbered lists wherever possible.
• Use, but do not overuse, graphs, diagrams and photographs.
• Have a neutral third party read the plan – especially someone without a background in your industry.
• Please – for the reader’s sake include a table of contents and page numbers in your plan.
Avoid
• Big words and long sentences. They only serve to confuse the reader.
• Technical words and unnecessary jargon. If you need to introduce a technical term, then you should define the term.
• Using acronyms and initials to express words is another common error.
You may be very familiar with the acronym but your reader might not. If an acronym has become as common as a word, such as scuba or laser, then use them. If they are still technical, such as URL then you may need to define the acronym and its meaning. Now that you have some background on the concept of the plan, we can look at the elements of the business plan.