| A business plan precisely defines
your business, identifies your goals, and serves as your firm's
resume. The basic components include a current and pro forma balance
sheet, an income statement, and a cash flow analysis. It helps you
allocate resources properly, handle unforeseen complications, and
make good business decisions. Because it provides specific and organized
information about your company and how you will repay borrowed money,
a good business plan is a crucial part of any loan application.
Additionally, it informs sales personnel, suppliers, and others
about your operations and 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.
"The business plan is a necessity. If the person who wants
to start a small business can't put a business plan together, he
or she is in trouble," says Robert Krummer, Jr., chairman of
First Business Bank in Los Angeles.
Despite the critical importance of a business plan, many entrepreneurs
drag their feet when it comes to preparing a written document. They
argue that their marketplace changes too fast for a business plan
to be useful or that they just don't have enough time. But just
as a builder won't begin construction without a blueprint, eager
business owners shouldn't rush into new ventures without a business
plan.
Before you begin writing your business plan, consider four core
questions:
- What service or product does your business provide and what
needs does it fill?
- Who are the potential customers for your product or service
and why will they purchase it from you?
- How will you reach your potential customers?
- Where will you get the financial resources to start your business?
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