Many people ask themselves that very question before starting a business or expanding an existing one and the quick answer is yes. Many entrepreneurs state that they have most of the information in their heads or on notes in outline form – why take the time to write it down in a format? It is well-accepted that if you take the time (a true commitment) to put your ideas in a clearly written form, the chances that your plan will be successful is multiplied many times over.
If you have never been a business operator and owner before, a detailed yet succinct formal business plan is what you need to give you tracks upon which to run. This train, with each of its cars (sections), will be pulled by a strong engine from the departure platform directly to a successful destination.
If you are an existing business owner considering an additional office or another retail store nearby (or completely out of town), a modified business plan will be helpful as you consider the costs and sales ramp-up period involved to reach breakeven.
On the other hand, if you are an experienced entrepreneur and have been through the process a few times, a “mini-plan” may be all that will be necessary for you to move ahead and obtain financing, if that is necessary.
If you foresee that funding the project will involve a lender, investor(s) and/or a landlord, a Business Plan is mandatory. Write for your intended audience but always write the plan for yourself. This plan will be an individual creation different from any other and bear your personal stamp.
Now, let’s talk about exactly what is in a business plan and how it works to help you. It is comprised of five major sections:
- Executive Summary;
- Business Description;
- Operations; and,
In addition, there are sub-sections to the marketing and financial areas, cover page, table of contents and an appendix.
Contrary to what you may think, the Plan is not written in the order one may read it. The first section to complete is the Marketing section. This is the “engine” that drives the train and delivers the revenue you need to insure that your business can meet its cash flow requirements. The second section to craft is the Financial section with the project costs and performance projections spanning up to five years supported by written financial assumptions. When these two sections are considered to be in final form, you have completed about 80% of the hard work.
Finally, you are likely interested in how long it will take to finalize a business plan. You can anticipate it taking about 60-90 days if you work on it studiously and consistently. How long will it be? It will be anywhere from 30-40 pages (plus copies of tax returns for lender) dependent upon the audience for your plan. How does it affect the plan if it’s just for yourself? It shapes into a shorter and less wordy document. And, for a bank or other lender? Work on just the facts and prove the ability to service the debt. Lastly, for an investor(s)? Show returns over longer periods, concentrate on the return on investment (ROI) and exit strategy for the investor. You will find the task engaging and rewarding in many ways and glad that you took the time to do it right.
For more details on creating your business plan, visit Alexandria Small Business Development Center’s website or call us to schedule a meeting to discuss your needs.