A lot of people talk about "business plans" and that you have to have one for any business. But what is a business plan and why is it important to your success? A business plan is a document that explains what makes your business unique and why it can succeed. By writing a business plan, you sit down and take the time to look at your new business in an objective and critical manner. And, once completed, a business plan will give you a path to follow.

A business plan lists the products or services your company will provide, your management methods, how you will market your company, how your company will keep its financial records, and your goals for the future. Your business plan will also examine the competition in the area and how you can compete against those businesses that are already up and running. Additionally, a business plan will explain the specific "niche" your small business will fill and why your business is qualified to fill that "niche".

Sitting down and writing a business plan helps you to focus your ideas and increases your chance for success and growth. A finished plan is not only a communication tool for your business, but it is also a document required by financial institutions if you are going to be applying for a loan to get your business up and running.

A business plan will explain how you expect to find potential customers and your plans for growing your business. Your business plan will also include how you are going to market your business, an analysis of your competitors, and forecasts of sales revenues.

It's not difficult to write a plan for your business. It does take some time, research and a quiet place to sit down and bring all the pieces together. Write your business plan in a style that is not only readable, but enthusiastic. This will show potential lenders that you not only know what it takes to run a successful business, but that you are excited about what you are doing. Keep your plan upbeat and positive, but don't stretch the facts and underestimate the time that it will take for your business to become profitable.

A typical business plan for a small company may run between 15-30 pages. Business plans vary, but typically include the following sections:

1. Introduction. This will include your cover page, executive summary, and table of contents. Your cover page should have all the relevant information about your business: name, location, owners, and the date the plan was prepared. Your executive summary will present a summary of the entire plan, including information about your company, your overall objectives, and your key personnel and their strengths.
   


2. Business Description. This will be more in-depth information about your business; the products and services you are selling, your service area, your potential clients, background information of key personnel, the unique features your company has to offer, and a timetable.


3. Business Organization. This section covers the legal structure of your business, how you will manage the business, how many employees you'll need, and insurance and security issues.


4. Competition. You need to have a realistic expectation of the competition in the area and how you can grab a share of the existing market. Is there more demand then supply for your product or service? Will you be filling a niche that is not being filled? What will make your company stand out from the other business in the area that are selling the same service or product?


5. Marketing Plan. No business can be successful if people do not realize you exist. A marketing plan will help you to focus on the steps you need to take to find and reach your target audience.


6. Financial Documents. Financial documents are the records used to project income and cash flow. Accurate financial records help to set the pace of your business. Include an income statement, cash flow statement, start up expenses, and projected balance sheet. Show projections for one year, three years and five years.


7. Supporting Materials. Include resumes of the owner(s) and key personnel, letters of reference, sample contracts, any legal documents about your business, and sample collateral materials.

It's important to write a plan for your business. Don't underestimate how important a business plan is to the success of your small business. Sitting down and writing a plan, forces you to look at the competition as well as your own strengths and weaknesses. A business plan helps to guide your business and makes sure that you have not forgotten any of those pesky details (marketing, bookkeeping, employees, training) that it takes to make your new business successful. Taking the time to plan before you open the doors can save you time, money, and headaches after your business is up and running.

Donna Evans is the owner if Gizmo Creations, a website design company located in Merrifield, Minnesota. Gizmo Creations specializes in designing websites for small businesses and non-profit organizations.

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