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A business plan is an absolute necessity when you plan to start a new business. Even if you don't need to approach a bank to borrow start up money, you do need to have a plan in place so you can keep track of your progress. This plan helps to define what your business is about, establish your goals for success and give you timelines to accomplish your goals. The basic components of a business plan include:
* A brief outline of your business
* Your mission statement
* Goals and timelines
* Balance sheet
* Income statement
* Projected cash flow
* Plan for unforeseen hindrances
When you start writing your business plan, you have to specify what product or service your business provides. You also have to show that you have researched the market proving that there is a demand for what you are offering customers. You also have to provide a cross-section of customers who will want to buy from you and tell the areas that they will come from.
As part of your business plan, you have to allow for advertising and marketing telling how you will let customers know about your business. If you already have the finances you need to get started, you should provide a detailed account of this in your plan. For example, if you are using your retirement savings, cashing in your bonds or borrowing money from family and friends, anyone potential investors will want to know where this money came from. The fact that you are using your own money tells others that you do believe you will succeed and this will make them eager to become part of your company.
Even if you don't want to borrow money or if you are not looking for investors, having a business plan is an important aspect to start out with. You can check back to the initial business plan to determine whether or not you achieved the objectives you stated. As you add the profit and loss sheets to the plan each year, you are building a potential resume for your business if you need expansion money down the road.