What is a Business Plan & Why Do I Need One?
What is a business plan?
If you are a first time entrepreneur, you must be overwhelmed by the idea of writing a business plan. You may, in fact want to know what is a business plan and what is it used for when you already have a solid business idea in mind.
The importance of business plan in starting a new business is just like using a map while driving to a new location. So, yes, the business is a roadmap to business success. And it is a document with every crucial detail, i.e. what you are going to sell or produce, the structure of your business, your vision on how to sell the product, how much funding you need, information on financial projections, among other details.
In fact, the first item in the checklist for starting a business is a business plan.
A good business plan has following components:
- Executive summary
- Company overview
- Products/Services overview
- Financial statistics & Financial goals
- Marketing plan
- Company Achievements
- People Behind the Idea
Why Do I Need a Business Business Plan?
Business plan is required not just to start a business, but to run a business profitably as well. It’s a document that lists set of business goals and objectives, and an action plan to achieve these objectives. Ideally, each objective is divided into a set of tasks and you list each task with deadlines and persons responsible for each task.
Even if you are a student entrepreneur and starting a business while at university, a business plan can not just only help you in starting and running your business, but can serve as your final project as well.
And yes, it is very important to update the business plan periodically, so you can analyze how well you are following the plan.. Ideally, you should update it at the end of each month.
How to Develop a Business Plan?
There are hundreds of articles already available on internet which guide you through the step by step process to write a business plan. For instance here are few very thorough and to the point articles:
Before you begin to start developing a business plan for your new venture, it’s necessary to brainstorm to make sure your team is prepared to answer some questions:
- Why am I starting this business?
- What makes my business different?
- What solution is my business providing? How do we offer it?
- Who are we? Be ready to introduce your key people.
- Who are the customers?
- What needs to happen to break even?
- How can the business make a profit?
- Where should the business be in one year? In five years?
There may be dozens of other industry specific questions, you should be asking yourself, but the above list is a good one to get started. Make sure your business answers each question above in a clear, concise, strategic, and realistic way!