Business Planning

If you have ever considered or even dreamed of going into business for yourself, you've already engaged in some degree of business planning. Most likely your planning was intertwined with your thoughts about the personal issues that accompany a decision to start your own business.In its most general sense, business planning is all about taking your dream and turning it into reality.

A business plan is the document you create when you take an idea for a commercial endeavor and work through all the factors that will have an impact on the successful startup, operation, and management of the business. Smart entrepreneurs plan, not because accountants or business advisors tell them to, but because they understand that it increases their chances for success. Sure, there are successful businesses whose owners fly by the seat of their pants and never create a written plan. But they succeeded despite the lack of a formal plan, not because of it. How much better might they have done had their good ideas been coupled with some solid planning? Those who have decided to embark on a new enterprise have probably already taken some steps, however informal, to confirm the viability of the new business.

Some guidelines for preparing a good business plan are:

1. Define your objectives for producing the business plan. Who is going to read the plan and what do you want them to do? The objectives can help you decide how much emphasis to put on various sections of the business plan.

2. Allocate enough time and resources to thoroughly research your business plan. A business plan is only as good as the research that went into producing it. For example, you will have to do research in order to find out more about your industry, your potential customers, your potential competitors, and your potential sales and costs.

3. Show drafts of your business plan to others. It can be very useful to get feedback on your draft business plan from various people, including both people associated with the business and others.

4. Write your own business plan. One common mistake made by entrepreneurs is to borrow heavily from a sample business plan and simply change the names and some of the numbers. There are two big problems with this approach. First, the emphasis you place on various sections of the business plan must reflect what is important in your particular business. Second, a good business plan should flow together like a good story, with the sections working together to demonstrate why the business will be successful. Business plans which borrow too heavily from other business plans tend to be disjointed, with some sections contradicting others and some key issues left unaddressed.

5. Outline the key points you want to make in each section before you start writing. Review your outline to ensure that your sections are consistent with each other, that there is little duplication, and that all the key issues have been addressed.

6. Make sure your financial projections are believable. For many readers, the financial section is the most important section of the business plan because it identifies your financing needs and shows the profit potential of your business. In addition, a good financial plan will give the reader confidence that you really understand your business. So be sure to test the reasonableness of each of your assumptions.

Overly optimistic assumptions or a failure to accurately reflect the full costs of operation can quickly destroy the credibility of your business plan.

7. Do the Executive Summary last. The executive Summary can be the most important section of your business plan because people will read it first and it may be the only section they read. The keys to a good executive summary are that it should be short (2 pages at most), it should highlight what is important in your plan, and it should get the reader excited about your age