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Why A Business Plan Is Important

There are about 30 million small businesses in the United States. About 500,000 new businesses start each month. The Small Business Administration defines a small business as one having fewer than 500 employees. For an entrepreneur who wants to drive on that road, a business plan is essential.  You wouldn’t take a long driving trip without the assistance of GPS. Similarly, shooting from the hip is not recommended in today’s business climate. The chances of succeeding and creating a prospering business depend on a strong business plan. It is the roadmap for how you achieve your end result. It is estimated that businesses with formal business plans grow 25% more than businesses without them. Here is a brief overview of key elements you need to consider when authoring a business plan: Profitability: A business plan will outline how profitable your business is likely to be  and its growth pattern. You should forecast and have a break-even analysis. Include a budget. Capital: A plan will give you an estimate of how much start up money and operating monies you will need including rent, salaries, inventory, employees, licenses, advertising, etc. Investors: The best way to attract investors to your enterprise is a formal business plan. It is doubtful an investor will give you money if you do not have a solid, formal written business plan that answers all of the questions that a potential investor will ask including those about forecasts and other milestones. Legal Structure: A plan will detail what business structure makes the most sense for your startup. Should it be a corporation, partnership, limited liability company, sole proprietorship, etc.? That decision has tax and other important management ramifications. Management Team: Who do you have in your brain trust and how many and what are their backgrounds and skill sets. What tasks will each member of the management team be responsible for? Real Estate: Do you have a location picked out? Is it a brick and mortar physical space or an online enterprise? Will there be a commercial lease involved? Customers: Clearly outlines who your customers will be and what market percentage you hope to gain. How will your business be different from potential competitors. Is it a completely original business undertaking? Competition: Outlines who your competitors are and what their share of market is. Knowing who and what your competition is can be crucial. Contingencies: Builds in potential problem scenarios and how to deal with them. Is there an exit strategy? Where do I go to figure out how to write a business plan? A business plan does not have to be a 100-page document. Less is more sometimes if the plan is done correctly. You should, however, include the points listed above. Remember also that  a business plan is never perfect. It is organic and should grow with the company and will be reviewed and updated often. Depending on type of business you plan, you should also include information that is specific to that business. If you new to starting a restaurant, for example, include elements like location and parking. If it is an online business, there are distinctive elements to consider. Who should you consult for your business plan? There are many good resources to help you with a business plan including books, the Internet and consultants. It is often wise to seek counsel from a business attorney, CPA and/or tax consultant. R. D. Adair, PLLC offers experienced business counsel and can assist you with your  business plan issues. To learn more about the preparation of a business plan,  or how we can assist you in a related matter, contact us today to schedule a consultation.

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