Why you need a Business Plan

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If you have decided to establish a business, you will need a business plan to raise money and help your new business succeed.

Reasons you need a business plan:

1. Set specific objectives for managers
2. Share your strategy/priorities with your partners
3. Decide what personnel is needed
4. Decide what new assets are needed and if you will need to buy or lease
5. Share your business objectives with the management team, new employees, and investors
6. Sell your business
7. Valuation of the business for formal transactions including finance and estate planning
8. Create a new business – Investors will need to understand your plan before they choose to invest.
9. Support for loan applications
10. Grow your existing business

A business plan formalizes and helps you refine your objectives, helps you plan your growth, and creates an action plan for your next steps. There are several components of your business plan.

What to include in your business plan

There are four main parts to a business plan:

1. Description of the business
2. Marketing plan
3. Financial plan
4. Management plan

You should also create an executive summary. Below is an outline of what goes into a business plan. This is only a guideline. Each business plan is unique.

Elements of a Business Plan

• Cover sheet
• Statement of purpose
• Table of contents
• Descriptions of your business
• Marketing plan
• Describe the competition
• Operating procedures
• Personnel
• Financial data

Your financial data should include:

• Loan applications
• Capital equipment and supply list
• Balance sheet
• Break even analysis
• Income projections (profit & loss statements) that could include a three-year summary, details by month and first year, details by quarters, second and third years.

You should include supporting documents:

• Tax returns of all principals for last three years.
• Personal financial statement
• Lease or purchase agreement for building space
• Copy of licenses, patents, and other legal documents
• Copy of the resumes of principals