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So what exactly is a business plan? For new business owners—or for entrepreneurial spirits who dream of one day starting their own business—creating this document may seem like a complicated, intimidating task. Simply put, a business plan is a written description of where you want your business to be in the future and how you plan to get there, and it plays an integral role in the day-to-day operations of your company. It also serves several other purposes: You can use it to attract new investors, employees, business prospects, vendors and more. Without one, your organization will lack purpose and direction, so creating a business plan today will help secure the success of your company tomorrow.
There are several different puzzle pieces of information that fit together to create a complete business plan:
Now that we have identified what the puzzle pieces are, we need to put them together properly. There are a few general guidelines for form that every good business plan should follow, and each plan should consist of these three main parts:
Those three main sections are broken down even further into seven key topic categories, which include:
Once these details are flushed out, your business plan will need just a few finishing touches: a cover, title page and table of contents.
There is no hard-and-fast rule about how many pages a business plan should be. It can range anywhere from several pages to 100 or more, depending on the complexity and nature of your business and the amount of detail you include. Simple business models may need no more than a handful of pages to get their message across. A new, innovative business model, however, may need a lot more explanation. The length of the business plan can also depend on the plan’s overall purpose. If it’s going to primarily serve as an internal document, your business plan will most likely be on the shorter side. If you plan on using it to pursue millions of dollars in investments, the information in the document should be a lot more thorough. On average, business plans are anywhere between 15 and 20 pages long. But, again, there is no magic number; there is plenty of room for modification.
If you own a business, you need a business plan. The only exception is if you consider your business to be a hobby or side-job that you dabble in outside of your full-time work. But if your venture requires a substantial amount of money, time and energy—and if you need it to return a considerable profit for your livelihood—then a well-thought-out business plan is a must. Fairly inexperienced entrepreneurs who are new to writing a business plan and who are seeking funding for their startups are, of course, the first people who come to mind when you hear the question, “Who needs a business plan?” But the truth is that well-established companies need a written business plan just as much as the new guy does. Successful companies still need a business plan to help manage their maturing organization, continue its growth and obtain even greater funding.
If you answer “yes” to any of the following questions, then it is most likely time to update your business plan:
Even though they may share some similar elements—such as objectives, marketing plans and cash flow projections—no two business plans are the same. Different businesses need different business plans, based on each company’s individual needs and goals. Plans vary in length, appearance and detail; therefore, the type of business plan you select for your company has a big impact on the effectiveness of your plan. It is imperative that your plan clearly and accurately represents your business and highlights its best features, no matter what the plan’s intended use is.
There are four different types of business plans, and each one entails a different amount of effort. But just because one type of plan may require more labor, it doesn’t necessarily mean that it is better than another type. It’s all about how the plan is being used for your particular business, so keep that in mind as you consider these four types:
A working plan also doesn’t have to look or feel as formal as other full-length plans. You don’t have to print it on high-quality paper or present it in an elaborate binder. Since it’s only going to be seen by you and your employees, any form of legible presentation is acceptable. Like a trusty pair of casual jeans, this plan is meant to withstand the wear and tear of everyday use.