A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business.
A business plan is a document that defines in detail a company's objectives and how it plans to achieve its goals. A business plan lays out a written road map for the firm from financial, and operational standpoints. Both startups and established companies use business plans.
A business plan is an important document aimed at a company's external and internal audiences. For instance, a business plan is used to attract investment before a company has established a proven track record. It can also help to secure lending from financial institutions.
Furthermore, a business plan can serve to keep a company's executive team on the same page about strategic action items and on target for meeting established goals.
Although they're especially useful for new businesses, every company should have a business plan. Ideally, the plan is reviewed and updated periodically to reflect goals that have been met or have changed. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.
For your small business to succeed, you need to know where you’re going and how you’ll get there. Creating a business plan forces you to set goals, determine the resources you will need to carry out your plan, and foresee problems that might otherwise broadside you.
Don’t expect every person you will send your business plan to read it thoroughly. In fact, you really can only count on them to skim it. Investors know what they’re looking for in a plan – they want to see a business that will grow rapidly and someday return a handsome profit. Venture capital firms, for example, expect to receive an average of five times their original investment within 5 to 7 years.
The average venture capital company receives several business plans every day. That translates into several hundred plans a year. They invest in only a handful – under 1%.
30-50 pages should suffice. Anything longer than that and you risk alienating a potential investor, or you force them to skim through the document rather than read it. You won’t be impressing anyone by creating a 200-page document – what’s contained in the plan is much more important than how long it is. The more concise and readable you business plan is, the more focused your business will appear.
It is essential that your business plan reflects your personality and your goals. As the small business owner, you need to decide what your business’ short and long-term goals are, and you need to make the planning decisions. You cannot leave these decisions up to a surrogate, whether it’s a business plan consultant, your lawyer or your accountant.
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