Morethen ever, a well thought out Business Plan is seen as a necessarytool for building a viable business. Whether you are seekingfinancing from a lender or plan on approaching the Small BusinessAdministration for a loan guarantee, a business plan is essential forpresenting the formalities of the business. In today's highlycompetitive marketplace, a formal business plan may mean thedifference between success and failure.

Whatis a Business Plan?

Simplyput, a Business Plan is a written statement outlining how you intendto operate your business into the future. While most business ownershave a general idea of how they want to run their business, thoseintentions are not written down. As the business grows and newchallenges emerge, the business owner often needs to involve othersin the venture. This is a time when the business owner findshimself/herself under pressure to formulate a plan for future growth.Unfortunately this time period affords the least amount of time forplanning.

Thefollowing are compelling reasons for developing a formal BusinessPlan.

ARoad Map To Success

Veryfew entrepreneurs achieve their goals without first formulating awell thought out plan of action. Any responsible entrepreneur willspend the time necessary to record his/her expatiations for thebusiness. Good planning guarantees preparedness for the future thusreducing challenges to their lowest denominator. Lessened challengesmeans less risk and a higher probability of success. It just makesgood business sense to plan ahead when risking money and resources.

PredeterminedCheck Points For Measuring Progression Of Goals

Likea traveler sets off on a journey and plans when to reach his/herdestination, a Business Plan also serves as a guide for the journey.With a Business Plan in hand, a business owner can set check pointsin which progress can be measured and adjustments made. As each stepin the business plan is reached an evaluation is made. Furtherfunding can be applied for physical expansion, upgrading equipment ormore employees. As each goal is satisfied a cycle of activitysignifies the beginning of new goals. New goals, mean an extension tothe plan.

TheBusiness Plan Is A Vehicle For Involving Others Into The Venture

Evenif there has been no need for employees, a Business Plan sets thestage for bringing new people into the business. This assureseveryone understands the goals of the business and what is expectedof them. Far to often the business owner thinks he/she can commutatewith their small staff of workers only to find out their employeesideas and theirs differ. A Business Plan provides the neededdirection for everyone to stay on the same track. The planningprocess also assist in the expatiation of meeting goals to theemployees and reducing the number of unscheduled crises that tend toarise.

TheImportance Of Developing A Loan Application

Agood Business Plan will be required by the lending institution beforefinancing can be had. Evan if you want to apply to the Small BusinessAdministration a lending institution must make the loan. The SBA willguarantee the loan up to 80% but the lender will need proof ofcapability. Are you capable of running a business? The lender willask for proof of experience, collateral and a statement on how youplan on paying back the loan if the business fails. Your relationshipwith the lender is strictly business as they want assurance ofrepayment. You must provide them reasonable assurance you know whatyou are doing and how you plan on doing it.

TheBusiness Plan Provides:

Apicture of past experience

Aplan for the future

Makesfinancial needs clear

Identifiespossible threats and provides reasonable solutions

Servesas a communication tool

Establishesdirection and sets company goals.

Donot take anything for granted. Be prepared for anything that canhappen before it happens. If you put it off until something happensit will cause a disruption in your ability to preform. Every sectionof the Business Plan should be considered. First settle on your legaldescription, name, product or service and logo. Then find a goodlocation and bring everything together with your Business Plan.

Hereare some of the things a Business Plan should contain.

TheBusiness

A.Description of Business

Form of Ownership

Location

Products or service offered

History of past experience

What is the Niche served

Need for niche ? demand

Growth potential

Longevity of product of service

B.Marketing

Customers

Competition

Products

Strategy

C.Management/Personnel

FinancialData

A.Pro forma Cash

Detail by the month for first year

Detail by Quarter, Second & Third years

Notes of Explanation

B.Pro forma Balance Sheet

IncomeProjection (profit and loss)

Detailby Month, first year

Detailby Quarter, Second & third years

Notesof Explanation

D.Financing Requirements

E.Insurance Requirements

Allexpatiations should be considered when writing a Business Plan.Project one year, five years and ten years. Break down each segmentinto its lowest denominator. If you want to make x amount of dollars,how many sales will it take and what will each sale consist of? Findthe answers and put them on paper.

Planto be productive and successful. Contemplate any and allpossibilities good or bad. Consider the ?what if? factor. Seekprofessional advice and don't sell yourself short. Beingself-employed is not for the faint at heart. It is a tough road totake. You will have to work hard spend long hours and put up with alot of rules and regulations. It is not the answer if you are seekingfreedom from an employer. Self-employment will suck the energy fromyou but if you planned right you'll be able to spend some time withthe family after a few years.