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Business plans are documents used for planning out specific details about your business. They can range in size from a simple few sentences to more than 100 pages with formal sections, a table of contents and a title page. According to Entrepreneur Magazine, typical business plans average 15 to 20 pages. Comprehensive business plans have three sections–business concept, marketplace and financial–and these are broken down into seven components that include the overview or summary of the plan, a description of the business, market strategies, competition analysis, design and development, operations and management, and financial information. Even small one-page business plans have importance and purpose for the success of the business however.
The primary purpose of a business plan is to define what the business is or what it intends to be over time. Clarifying the purpose and direction of your business allows you to understand what needs to be done for forward movement. Clarifying can consist of a simple description of your business and its products or services, or it can specify the exact product lines and services you’ll offer, as well as a detailed description of your ideal customer.
Businesses evolve and adapt over time, and factoring future growth and direction into the business plan can be an effective way to plan for changes in the market, growing or slowing trends, and new innovations or directions to take as the company grows. Although clarifying direction in the business plan lets you know where you’re starting, future vision allows you to have goals to reach for.
The Small Business Administration states, “The development of a comprehensive business plan shows whether or not a business has the potential to make a profit.” By putting statistics, facts, figures and detailed plans in writing, a new business has a better chance of attracting investors to provide the capital needed for getting started.
Attract Team Members
Business plans can be designed as a sale tool to attract partners, secure supplier accounts and attract executive level employees into the new venture. Business plans can be shared with the executive candidates or desired partners to help convince them of the potential for the business, and persuade them to join the team.
A business plan conveys the organizational structure of your business, including titles of directors or officers and their individual duties. It also acts as a management tool that can be referred to regularly to ensure the business is on course with meeting goals, sales targets or operational milestones.
by Kathy Burns-Millyard