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Business Plans

By Catherine Kitcho

Who needs a business plan?

Anyone who is in business or is in the process of starting a business.

Most people think that the only reason to write a business plan is to obtain venture capital. While it is true that venture capital investors use the business plan as a tool to evaluate the investment potential of startups, the primary value of writing a business plan is for the entrepreneur or manager to go through the thinking process of how the business will operate.

Business plans aren't just for entrepreneurs, either. Anyone who is in an existing business who is preparing for a growth phase, or introducing a new product, or entering a new market, or applying for a bank loan also needs a business plan.

There are many books written on how to write a business plan, and there are literally hundreds of different outlines that can be used to create the document. There are also software packages out there that will do the writing and spreadsheets for you, and all you have to do is fill in the blanks. The formats are not important and neither is the order of topics. You can choose whatever outline you like, as long as you answer these basic questions:

WHAT is the product or service?
WHO is the customer and target market?
WHY will they buy it?
WHO are your competitors?
HOW will you get your product or service to the market?
WHO is the management team?
WHO are your partners?
HOW will you spend the resources? (capital and people)
HOW much money do you need?
HOW much money will you make?

You need to think through the answers to these questions before you start writing the business plan. There are usually several iterations in the process before you are ready to start writing.

Business plans are dynamic documents, and they are not meant to be written once and then put on a shelf. They will function as a useful guide in the development of your business concept for you and your management team, and also serve as a basis from which you can create presentation materials to communicate and sell your business concept to others.

Business plans should be short and concise. The goal is not to produce pounds of paper. Investors in particular prefer short business plans as long as they address the key issues.

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