A business plan is a recognized management tool used by successful or prospective businesses of all sizes to document business objectives and to propose how these objectives will be attained within a specific period of time. It is a written document which describes the owners and operators of the business, the business itself and the products/services the business will be providing, what the business plans to achieve, where your business will be located, how the products and services will be marketed, and how the business will overcome the risks involved and provide the returns anticipated.
The business plan is an important tool for helping you manage your business. The business plan assists with:
- Setting objectives – both long term and short term. Establishing objectives aids decision making and enables to you determine which actions and processes can facilitate the achievement of your objectives.
- Determining the viability of your business idea. If you are just starting your business, the plan can assist with evaluating the feasibility of the idea and when and if you will experience a return on your investment.
- Obtaining financing. Financial institutions and granting organizations rely on a comprehensive business plan to evaluate the need for funds.
The length and complexity of a business plan should be appropriate to the needs of the business and should evolve with the company. If you are seeking financing you will need a formal comprehensive plan. If you are an existing business and are completing an annual plan review, a one-page document with objectives and an action plan may be sufficient. The process of preparing a plan is a valuable exercise – the research you do, decisions you make, and goals that you set while creating the actual business plan.