What is a Business Plan Anyway?
As defined by Wikipedia, a business plan is “a formal statement of a set of business nikportal.net, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals”. This is great, but doesn’t tell us much about what it truly is and how you end up with a plan.
Cheryl describes it as a process, which really resonated with me. She said, “The process is a series of taking your thoughts and visions and applying it to paper to basically give you a fast check to say, ‘Is this really a great idea to keep moving forward with? Is this something I should do? If I can do it, how can I make it work?”
Given that it is a “fast check”, it doesn’t need to be so formal to start. Cheryl indicated that she has created many a plan for her clients based off of scribbles or business journals. She recommends, when you’re just starting to think about forming a business you may want to dedicate a notebook or journal to jot down all the thoughts you have about your business. this sparked my memory, as I recalled that some of the greatest companies out there have started by a doodle on the back of a napkin. Companies such as Genentech, who’s founders spent some time doodling on their napkins over drinks and hoagies which they later turned into a formal business plan and a flourishing biotech business.
Why Do You Need a Business Plan?
Aside from it being a litmus test to see if your business venture is even feasible, a business plan is a roadmap to help you get from where you are to where you want to be. And, as Cheryl indicated, unless you’ve never planned one thing in your life (i.e., a party, vacation, etc.) you need a business plan. Also, as you flesh out your plan, it will help you determine, “how great an idea is and how bad it is in certain places and what you need to do to fix it” Cheryl says.
A business plan will also help you from a financial aspect. From the initial funding stages to determining when you will break even and bring in profit, the business plan can provide you with a timeline a well as a way to course correct when needed. Cheryl also notes, depending on who needs to see your plan, the detail may vary, but the basic structure will remain the same.
What is the General Structure of the Business Plan?
There is no right or wrong, rather structure is typically dictated by whomever needs it. If you are self-funding, then you want to make sure you have the market analysis, a break-even analysis, etc. If you are getting funding, then the bank, VC or family member may require other information. That said, here is a rough outline of the recommended components of a business plan, detailed further in the tools section under “Business Plan Outline” on Inc.com.