Why Is A Business Plan Valuable to my Business?
Much more than a tool to obtain financing, a business plan helps clarify your company's direction and can give birth to a corporate philosophy.
Think of a business plan as a blueprint for your company and its success. You describe what your company is, what it does, who specifically does the work, what it takes to do that work and who is the competition. With this information, you can project where you want your business to be and what it will take to get there.
Typical business plans are broken down into five basic categories:
- Your Identity and Personnel
What is your company and who are the key players? You identify your business' legal name and status. You also identify key personnel - their backgrounds, their fields of expertise, and any proposed additions to the team.
- Your Physical Plant
This is a description of your business location, your rent/mortgage expenses, plus your maintenance and insurance costs. You need to determine if you'll require more space, and if your location gives you a competitive advantage. You also analyze current and projected plant machinery and equipment to see what expenses you can anticipate.
- Your Product
What exactly do you do? You examine each of your products and services in terms of percentage of your business and opportunities for growth - including upcoming products and services in development. The flip side of your products are your raw materials, so this section includes a list of key suppliers and required stock levels.
- Your Business Environment
This section examines market conditions - the nature of your customers as well as your competitors, sales potential, and what promotional steps you plan to take to grow your business.
- Your Bottom Line
This is a brief financial analysis - a listing of information for years past, and projections for future.
By identifying the strengths and weaknesses of your company, certain patterns begin to emerge. Perhaps you'll identify new opportunities for growth. Or areas where you can affect savings - changes that will make your company more efficient. You might effectively predict upcoming problems, or prevent them.
In other words, the perspective gained through a good business plan can make a significant contribution to your company's success.