Business Plans are for all businesses. Sure, it’s a basic necessity if you’re seeking angel investors and going after venture capital money, but writing a business plan is helpful to all business owners, whether you’ve operated your own restaurant for 10 years or are starting up your home-based graphic design firm.

Developing a Business Plan is important to the business owner on multiple levels.

You HAVE to do it.
If you’re going to seek funding either through investors or bank loans, one of the first items requested will be a business plan. Basically, this is where you get to describe what your business is, what funds are needed and how they will be used. You describe the business with words and numbers (the financial statements).

An interior designer came to me, looking for financing. We started working on the business plan and as we worked together on the financial assumptions section, she described how she bills her clients. It became clear that if she slightly upped the deposit amount she asked of her clients, and billed her clients on a more systematic basis, the strain on her business’s cash flow would be significantly less. Turns out, through the process of describing the details of how her business operates, she was able to come up with an alternative solution to obtaining a large loan.

Generating New Ideas

Even if you are not actively seeking financing, the business plan is a structured way for you to hash out your business idea. It disciplines you to think about your business from multiple perspectives, and to set down in writing the assumptions you are using in starting and operating your business.

The best business plans I’ve seen are those which are very clear, so that even an intelligent 8-year can understand what the business is about. I recommend to my clients that they always pretend that they are explaining their business to this young child. Don’t feel the need to use jargon and fancy terms— a business plan is meant to communicate clearly and not confuse.

I’ve often found that the more concisely and simply someone can describe one’s business, the easier it is for her to communicate with customers, investors and consultants. It becomes easier to incorporate lessons learned from other industries and sectors, when you know how to articulate your business from different points of view.

The business plan becomes a point from which to launch discussions and develop new strategies.

It’s good for YOU.

One business owner makes the most scrumptious scones and can write amazing press releases but breaks into a sweat at the thought of doing a sales projection…. Another feels comfortable crunching the numbers but isn’t convinced she knows how she will find out the market research numbers themselves. Writing a business plan will prompt you to work through these questions, especially if you have someone to provide you feedback. As you encounter the sections of the business plan that you find more challenging, you have an opportunity to gain and strengthen your business skills. This process gives you a broader skill set from which to manage your business.

Writing It

So what about the business plan itself? Over upcoming issues we’ll go into more depth on the various sections that comprise a business plan. In the meantime, there are a number of plans and guidelines online. For example, many commercial banks have sections on their websites oriented to small business. They often offer business plan templates and guidelines. Also check out the organizations listed under “Resources.” These are organizations that will help you through the process and cheer you on.

The most important thing is to just write it! Happy writing!