The Six Important Functions of a Business Plan by Michael Brassil
Most small business owners and future entrepreneurs know the importance of having a business plan. You probably know a sound business plan is critical when securing financing. You may not realize, however, the benefits of a business plan expand well beyond that single use. It is also a critical tool for your use as you develop and grow your business.
The business plan is a written document that clearly identifies and defines the goals of a business and precisely outlines the methods for achieving them. It is a complete and detailed description of exactly how you intend to operate your proposed business, as well as a communications tool for investors and others interested in understanding the operations and goals of your business. Your plan will be a working tool, a blueprint on how you are going to build your company, a succinct document that specifies the components of a strategy with regard to your business mission.
1. A business plan offers a path to follow in making crucial startup decisions.
It is a management and financial “blueprint.” In short, it is your most important guide to starting, building and managing a successful business.
2. The plan clarifies your ideas and establishes a plan of action.
It explains how the business will function in the marketplace. It describes what you are selling, your background and qualifications, who your prospective customers are, where they can be found, what is needed to build the business, how you plan to promote and determine the viability of the venture in a designated market.
3. It is an operational tool.
The business plan is a tool that clearly depicts characteristics which, when properly used, will help you manage your business and work toward its success. It is a means for communicating your ideas to others by measuring operational progress.
4. Your business plan is a financial tool.
By determining how much money will be needed for start-up costs, it details how the business will be financed. And, as a prospectus for potential investors, it is an important tool to help obtain financing by anticipating ongoing capital and cash requirements to reassure lenders or backers.
5. It is a benchmark for good operational management.
The finished plan will be an operational tool that provides guidance to the entrepreneur in organizing planning activities to help move the business forward.
6. Finally, a business plan provides for future growth.
An explanation of how you plan to keep your business growing — a detailed guide of what you are going to do, and how you are going to increase your profits. These plans should outline your specific goals for the coming one, two and three years. By breaking your objectives down into annual milestones, your plan will be accepted as providing a realistic determinant of your ultimate success.
If you have not yet finished — or need to update — your business plan, now is the time. Your company’s success depends on it!
About the Author
Michael (Mike) Brassil is author of “The Only Business Start-Up Guide You Will Ever Need.” Download two chapters — Starting a New Business and The Home Working Revolution — at www.impactguide.com.