Why a Business Plan is needed.
Imagine that all the money you have exists as quarters. Now imagine that you are expected to carry all of those quarters in your pants pockets or purse. Naturally, you would be weighted down and unable to move.

Keeping “everything in your head” regarding your business operations will create a similar situation: your mind will be “weighted down” leading you to a state of mental exhaustion.

To be successful in business, a clear mind is needed in order to make the best possible management decisions. Having a written business plan that is relevant to your business, combined with a good dose of common sense, will help you keep your mind clear.

Get good advice from the right advisers

No one is expected to know everything about everything that is needed to run a successful business … and to keep it going. Thus, it is wise to get advice from trusted professionals who have specific knowledge and experience in key areas regarding your type and size of business.

An attorney and an accountant are the first two advisers each business owner should have. Your attorney can help you decide which type of legal entity (e.g, sole proprietorship, partnership, or corporation) your business should exist as. Your accountant can help you set up your financial records so that you have an accurate reading of what is happening within all parts of your business (a/k/a financial dashboard). A good attorney and a good accountant can each be worth their weight in gold.

Another adviser can be a mentor who is, or has been, successful in your type of business. Guidance from this individual can be invaluable by letting you know beforehand what flat out won’t work … and some of the things that will.

If you are a technical genius but you are terrified of having to sell your product or service, then securing advice from one or more professionals with knowledge and experience in marketing, selling, and/or public relations is a must.

Seek advice from other professionals who have specialized knowledge in areas that you don’t. Let your good sense be your guide as you build your team of advisers to help you build your business plan.

Keep the details reasonable

Not all businesses need the same level of depth in all aspects of the business.

One component that must be addressed for any business type is equipment. For example, a manufacturing firm must address production equipment acquisition, an adequate equipment down time/maintenance plan, and final disposition once a piece of equipment has reached the end of its useful life span.

Whereas an accounting firm needs to be concerned only with having standard office equipment of a desk, comfortable chair, high quality printer, and and a computer with terabyte (and possibly petabyte) hard drive capacity equipped with the latest accounting and tax software.

Provide answers to probable questions.

Different businesses have different demands. For example, a restaurant (depending on its menu selections) will need a variety of food suppliers for meat, fish, poultry, and vegetables. Within the supplier section of the business plan, summary comments should reference the copies of the supplier agreements that appear in the Appendices section. Additionally, a description of steps for proper food storage that will prevent (or, at least, minimize) waste and contamination must appear in the appropriate section.

An equipment-intensive manufacturer will need to address worker safety by providing a detailed safety plan in addition to a capital equipment maintenance plan that indicates proper and preventative care – which is intended to assure that no equipment malfunctions occur.

In short, the more a business plan provides details about mitigating risk, the greater the chances of getting investors and bank loan request approvals. 

For a summarized version of this page, go to: The Value of Business Plans