A business plan is a written description of the future of your business. That is all there is to it. It is document that describes what you plan to do and how you plan to do it. If you write down a paragraph on the back of an envelope describing your business strategy, you have written a plan or at least the start of a plan.
Business plans could help perform a number of tasks for those who write and read them. They are used by entrepreneurs that seek investments to convey their vision to potential investors. They might also be used by firms that are trying to attract key employees, look for new business, make deals with suppliers or simply to understand how to manage their companies better.
So what is inside of a business plan and how do you put one together? A business plan simply conveys your business goals, the strategies you will use to meet them, potential problems that might come up for your business and ways to solve them, the organizational structure of your company and the amount of capital that is required to finance your venture and keep it going until it breaks even.
There are three important parts to a business plan:
The first part is the business concept. This is where you discuss your business structure, the specific product or service, the industry and how you plan to make your business a success.
The second part is the marketplace. This is where you describe and analyze potential customers, such as who and where they are and what makes this person buy and so on. This is where you also describe the competition and how you’ll position yourself to beat it.
Income and Cash Flow Statement
The final financial section contains your income and cash flow statement. This includes a balance sheet and other financial ratios such as a break even analysis. This part of the plan might require help from your accountant and a good spreadsheet software program.
Click here to learn 4 reasons why you need a business plan!
How Long Should the Business Plan Be?
A useful business plan could be any length from a scrawl on the back of an envelope to more than one hundred pages. A typical business plan runs fifteen to twenty pages, but there is plenty of room for wide variation from that norm.
Much of this will depend on the nature of your business. If you have a simple idea, you might be able to express it in very few words. On another hand, if you are proposing a new kind of business or even a new industry, it might require quite a bit of explanation to get the message across.
The purpose of your business plan also determines its length. If you want to use your plan to get millions of dollars in seed capital to start a risky venture, you might have to do a lot of explaining and convincing. If you are just going to use your plan for internal purposes to manage an ongoing business, a much more condensed version should be fine.
Do you need assistance with preparing a business plan? Click here to contact the experts at Hunsberger Dunn LLP today!