Why You Need to Have a Business Plan

Every business needs to have a properly developed business plan that showcases every aspect of its venture. However, it should be noted, that you can only do so much “looking forward” when it comes to entrepreneurial activities. In any business venture, you are going to encounter a number of surprises that you never saw coming. As such, when you are developing your business planning documentation, you should primarily focus on the market in which the business will operate, the anticipated profits of the business, how you will manage the cash flow on a day to day basis, implementation of your marketing plan, and what to do if the proposed venture does not going as planned.

Typically, when you are drafting this type of document, you are going to want to create nine distinct chapters that will provide you with a complete overview of your business. These chapters include an executive summary, the usage of financing, products and services analysis, an overview of the organization, strategic market analysis, competitive analysis, marketing plan, personnel plan, and a full financial plan.

Although not often completed by people that are writing business plans, you should also include an analysis that lists the strengths, weaknesses, opportunities, and threats that you business will face. Also, you may want to draft a section that thoroughly examines the critical risks and problems that your business may have as your progress through your venture’s operations. This includes discussing the risks relating to starting your business, financing risks, marketing risks, competition that will you will face, and other issues that may impact the way that you do business.

Also very important within your business plan is to discuss the potential exit strategies that you will use when you decide to sell your company. You may want to discuss hiring a business broker or small mergers and acquisitions based investment bank that can assist you in providing a valuation of your business while concurrently marketing the company to potential buyers. As with any business, ultimately you are going to want to earn a substantial profit from the sale of the company once you decide to retire or move on to a different business venture. Often when discussing exit strategies, you should also focus on what would need to be completed to transition the business to a new owner.

Finally, the last section of your business plan should include a one to two page conclusion. Here, you should outline all of the positive aspects of your business while also showcasing the risks and problems that you may face. If you are able to properly develop all of the aforementioned aspects of your business plan then you will have a very good understanding as to whether or not you should start this business. On a side note, if you are applying for any type of financing then you will be required to produce this document to show to your banker or a potential investor.