A business plan is key to your success

Take a look at what goes into a business plan so you can develop one for your own business. It doesn’t have to be a long document, but it must show that your business is viable.

Why bother with a plan? A well-developed business plan is an important tool for business success. Here are some of the key benefits of a business plan:

• Organizes your thoughts in logical order
• Helps you anticipate problems
• An essential document when applying for financing
• Assists you in decision-making
• Guides your employees, partners, and suppliers
• Keeps you on track to achieve objectives

Although your plan should be tailored to your vision and can contain creative touches, there are key elements that every plan should contain.

Most traditional business plans are broken down into the following key sections.

This section contains information about you (and your partners if applicable), your goals, what your business will do, and your vision:

• Business overview – general information about your business, such as name, address and structure
  
• Personal goals – describes the personal aspirations you hope to achieve through your business
• Business vision – a brief statement that tells readers what you believe in and where you're going
• Business objectives – knowing your objectives will allow you to measure your business' success
• Product/services overview – describes what your business sells, what services it offers, and what makes it unique

This is information about your industry, customers (and potential consumers), along with your competitors. Market research provides you with this kind of information:

• Industry factors & trends – explain factors and trends that affect your business, discuss your industry's future, and estimate the size of your market
  
• Competition – identifies your competitors and translates their strengths and weaknesses into opportunities for your business
• Customers – describes the type of customers you're targeting, and consider the factors that will make them choose your product or service

This is where you outline your strategy for attracting and keeping customers and show how you plan to increase sales over time:

• Sales – This should detail where you sell your product or service, your sales process and such things as after-sales servicing. Turning a perfect stranger into a happy customer takes more than a great product or service.
  
• Marketing – Effective marketing can help you increase your business and sustain its growth. Your business plan should include your strategies on product positioning, pricing and promotions. This will provide reassurance to financial backers as well as a guide for your internal marketing and sales teams.

This section covers how your business actually runs (or will run once started), including your staffing, management, the suppliers you will use, any alliances you have and your contingency plans to deal with challenges:

• Your team – The players on your team are an integral element in helping you reach your goals. This section should include a brief biography of yourself (and partners) as well as profiles of key members of your team, highlighting any special qualifications and skills. You may also include brief profiles of external advisors to your business.
  
• Suppliers and alliances – Here you should list external relationships that are important – or even vital – to your business.
• Planned changes – Ongoing growth may mean big purchases, new premises or contractual agreements that may impact your business plan.
• Contingency plans – This involves risk management and how you have prepared yourself and your business for potential and unexpected challenges. It should detail what challenges may face your business and the plans that you have in place to deal with them.

This is where you detail financial resources, including personal resources, to show how you will support your business projections:

• Personal finances – Outline what you personally own and owe, and consider your plans for your long-term financial well-being.
• Business finances – Prepare financial statements that describe the past, present, and future of your business. This should include your balance sheet, income statement and cash-flow projections. If you are operating an established business, your financial statements should be backed up for at least three years.

Your financial plan can help you anticipate when your business will need to borrow, the amount of financing you'll need, and how to allocate the money.

In all likelihood, you’ll spend a considerable amount of time doing the research and then drafting your business plan. To get the most mileage from your hard work, treat your plan as a practical document that can help you reach your personal and business goals.

For instance, if you find yourself caught up in the day-to-day operations of your business, taking a fresh look at your business plan can help you stay focused on the bigger picture.

• To start, write out a few achievable, measurable goals (including a budget) that flow from the business strategy laid out in your plan
• Then measure your progress every month against the benchmarks in your plan
• Revisit these goals periodically in light of changes to your business, the marketplace, or the larger economy to help keep your plan fresh and vital

Using your plan in this manner on an ongoing basis will help you maintain your strategic focus.