Definition: A business plan defines your business, identifies your goals, and serves as your firm's resume. The basic
components of an effective Business Plan include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make the best possible business decisions. Because it provides specific and organized information about your company and how you will repay
borrowed money, a good business plan is an important part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.
The importance of a thoughtful business plan cannot be overemphasized. Much depends on it: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives.
5 factors for an Effective Business Plan
Clearly define your business idea and be able to succinctly articulate it. Know your mission.
Examine your motives. Make sure that you have a passion for owning a business and for this particular business.
Be willing to commit to the hours, discipline, continuous learning and the frustrations of owning your own business.
Conduct a competitive analysis in your market, including products, prices, promotions, advertising, distribution, quality, service, and be aware of the outside influences that effect your business.
Seek help from other small businesses, vendors, professionals, government agencies, employees, trade associations and trade shows. Be alert, ask questions, and visit your local SCORE office.