May 20th, 2006 by 
Brandon Hopkins What is a business plan?
A business plan, in it’s simplest for, is a plan that defines your business. Business plans identify your goals as a company and gives your company direction for the future. By creating a business plan, you are essentially creating a resume for your company that tells other companies and investors what your business is planning to do in the future.
How do I get started?
There are many companies that sell business plan software. This software takes you through the steps of creating a business plan from beginning to end. There are also companies that will help you create your own business plan step by step. Obviously the latter involves a more personal approach and tends to be more costly, but also more customized to your business.
What do I need to include in my business plan?
For your business plan to be complete, you need to include a current balance sheet, pro forma balance sheet, cash flow analysis, and an income statement. These will help you decide how to spend your limited resources and plan for the companies future. These are the basics of any business plan. With these documents in place, you can give your business plan to Venture Capitalists (VC’s), loan officers, suppliers, and sales personnel.
Think your business plan through.
A complete business plan is more than just attaching a few pieces of paper together. A complete business plan can make or break your business. With a complete business plan, you can be on the fast track to get funding, credit accounts from your suppliers and can help you realize you company goals.
The importance of a comprehensive, thoughtful business plan cannot be overemphasized. Much hinges on it: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives.
Before you begin…
Many entrepreneurs and small start-ups argue that business plans are irrelevant because the business market changes rapidly. This however is flawed thinking because a business plan defines your businesses core ideas and goals regardless of the changing market.
A rapidly changing business climate calls for a business plan more so than a stagnate business climate does. In a stable or stagnate business climate, the business is understood and the business plan is just a formality. In a rapidly changing business market, your business plan details how you plan to handle future issues, such as a changing market.
Consider these questions before you type your first word:
Does your product or service fill a need?
- If “No“, does your product or service enhance an already occupied place in the market?
- If “No“, maybe you should rethink your product or service.
Who is your target demographic?
- This can be related to age, sex, religious affiliation, annual income, or anything else that defines a market segment.
- If you cannot define your target demographic easily in under 10 words, reconsider your target demographic. Your target demographic for your business plan should not be “everyone”.
How will you reach your target demographic?
- “Advertising” is not a complete answer. You must have a well though out, and well formulated plan on how to reach this target audience. If you create a breakthrough product, but cannot reach your audience, price and features don’t matter.
How will you fund your new business?
- Will you get “Angel Investors”? (LINK TO “What Are Angel Investors?”)
- Will you go to Venture Capitalists? (LINK TO “What are VC’s?”)
- Will you fund your business with your own money?
A business isn’t cheap to start, so begin to plan how much money you are going to need.
A business plan is a crucial step in forming your business. You can’t, and shouldn’t, ever skip the step of forming a business plan before forming your business.
A business plan paves the road to business success. Don’t you want your business on a well paved road?
Resources related to creating a business plan:
Guy Kawasaki lists 9 steps for writing a successful business plan.
Brendon Wilson posts an article about Ann Winblad and her tips for creating a business plan.
Feld Thoughts posts one of his first business plans for Feld Technologies.
IdeoBlog talks about United Airlines new business plan.
Dane Carlson of Business-Opportunities talks about why some companies fail in creating their business plan, how to write a business plan, the “Just Right” business plan, and gives a template for writing your own business plan.