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Why is a business plan so vital to the health of your business?

A business plan is a written description of your business’s future. That’s all there is to it. It is a document that describes what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you’ve written a plan, or at least the seed of a plan.

Business plans can help perform a number of tasks for those who write and read them. They’re used by investment seeking entrepreneurs to convey their vision to potential investors.

So what’s included in a business plan, and how do you put one together? Simply stated, a business plan conveys your business goals, the strategies you’ll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.

Sound impressive? It can be, if put together properly. A good business plan follows generally accepted guidelines for both form and content. There are three primary parts to a business plan:

  1. The business concept, where you discuss the industry, your business structure, your particular product or service, and how you plan to make your business a success.
  2. The marketplace section, in which you describe and analyze potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you’ll position yourself to beat it.
  3. The financial section contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from your accountant and a good spreadsheet software program.

A business plan consists of seven key components:

  1. Executive summary
  2. Business description
  3. Market strategies
  4. Competitive analysis
  5. Design and development plan
  6. Operations and management plan
  7. Financial factors

In addition to these, a business plan should also have an impressive cover, a descriptive title page and a compelling table of contents.

How Long Should Your Business Plan Be?

A typical business plan runs 15 to 20 pages, in the case of an especially detailed plan describing a complex enterprise, more than 100 pages, but there’s room for wide variation from that norm.



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