Business Plan Essentials: What is a Business Plan?

A business plan is an overview of a business' operational and financial goals. A typical business plan includes a summary of issues such as:
  • assets
  • finances
  • staff performance and expectations
  • products
  • services
  • marketing and branding
  • long-term goals.
A business plan should also provide current financial statements, detailed budgetary projections and an explanation of how the business plans to achieve its objectives.

Benefits of a Business Plan

All businesses, regardless of size, need a business plan. A detailed business plan is a vital tool for any business, large or small. In addition, a business plan provides an essential and invaluable guide for the small business owner. Without a business plan, the future of your business is less secure.

Business Plans for Small Businesses

Many prospective small business entrepreneurs mistakenly believe that because they are essentially a "small" business they don't need to write a business plan. Wrong! A business plan is vital and can spell the difference between the success and failure of your small business.

Good Reasons for Writing a Business Plan

A business plan can help your small business:
  • secure funding, loans and credit for your small business
  • guide decision-making, based on the data provided in the business plan
  • allocate resources more effectively using the business plan projections
  • highlight potential problems in your small business
  • advise suppliers about the goals of your small business
  • keep sales personnel "in the loop" according to the business plan overview
  • manage your business information more effectively
  • target potential markets with greater accuracy.

Small Business Plan Checklist

Don't know where to start or what to include in the business plan for your small business? In general, all business plans follow a similar format and address four main core questions.

  • What service or product does your small business offer and what customer requirements does it fulfill? Your business plan will need to provide evidence that your small business can fill a "gap in the market," which is sustainable. This part of the business plan should also demonstrate that you have the capacity to promote the unique identity of your small business' product or service, long-term.
  • Who are your target customers and why should they choose to purchase from your small business rather than from the competition? This section of the business plan involves gathering and collating market research data and presenting a detailed analysis of the market for your small business.
  • How does your small business propose to target prospective customers? Ask yourself how you intend to capture your particular sector of the market. You will need to develop a detailed marketing strategy and provide in-depth information, in your business plan, so that you can maintain an edge over the competition.
  • Does your small business have the necessary financial security and assets to set up (and stay) in business? In this section of the business plan, prospective business owners need to identify all available resources. You will also need to address potential "worst case" financial scenarios, in this part of the business plan.