Purpose of a Business Plan
Basically, a business plan is a vehicle for internal and external communication that provides a statement of where a business is going. The business plan can be in several formats. While the structure and length may vary from format to format, there is one common central theme regarding the development of a business plan: it is absolutely necessary. Without some form of plan, a business is doomed to almost certain failure.
Internally the business plan ensures agreement about the direction of the business, and externally it conveys to outside organizations (e.g., a lending institution) what the business intends to do. A business plan serves the same purpose as a map. It will guide you in your journey, helping you avoid roadblocks and detours on the path to success in business. However, just like a map, it can only guide you; it cannot actually take you to your destination.
One of the major benefits of writing a business plan is the process itself, since it requires you to put your goals and plans down on paper. Even if there is no need to present the plan to an outside person or institution, the exercise of writing the business plan, if done carefully, will provide a clear direction of where the business is going and how you hope to get there. The business plan can also be used to measure progress toward the stated goals of the business. For businesses that need outside funding, the business plan is a primary requirement to attract financial backing.
Organizing and Writing a Business Plan
There is no standard format or length for a business plan, nor are there shortcuts to writing a good business plan. Just like running a business, it takes a good deal of time and effort. If done correctly, the result makes it well worth the time and effort.
The first step in developing a good business plan is to simply write until you have said all you need to say and no more. While every point needs a thorough explanation, it is important not to bore the reader with redundant or highly technical jargon. (You may want to put the technical information in appendices so the reader can choose whether or not to read it.) The plan will likely be in the "draft" stage for up to the first six months of planning activities. Ideally, the business plan is never fully completed, because it should become a dynamic, living document.
Because each situation is unique, this section presents a generic approach to organizing and writing a business plan. A standard business plan outline is provided in Figure 4-1. Each section and subsection of this outline is fully discussed below. The approach is flexible. For each section of the outlined plan, numerous options in the form of questions are provided; select the options that are applicable to the requirements of your business. This "shopping list" approach enables you to tailor the items to your situation. The question format will stimulate you to think about what you need to say about each item. If a question does not apply, pass over it; if it does apply, answer it as thoroughly as possibly.
As anyone who has ever tried to write a business plan can attest, the hardest part of the writing process is getting started. In reality, however, you have already started your plan. Your vision statement and the thought you have already given to involving others, demonstrating your product's value, and developing a new product have given you the basis for your plan. Because your industry, product, and market are so critical to your ultimate success, these areas will receive more detailed attention as you proceed to develop the written plan. But you have already begun your journey. The following information will help you complete your plan. Good luck on your journey, and remember, no shortcuts.
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