Do I Need a Business Plan?

If you have a small business or you are contemplating starting one, you may wonder if you need a business plan.

The fact is that all businesses can benefit from a business plan. If you need funding for your business, potential backers will want to see your business plan. Even if you are starting a work at home business that does not need financial backing, a business plan can help guide you as your company grows.

How Does a Business Plan Guide a Company?

To write a business plan, you need to research the niche you would like to fill. What makes your idea unique? How are you different from other companies in your field? If you do this research before you actually begin your business, you can be sure you have a viable idea.

Another important consideration is how your business will actually make money. To know this, you will need to know your market base. What services will you provide? How old is your ideal customer, and what services do they need? Answering these questions can help you target both your marketing efforts and your business goals.

As you learn more about your prospective clients, you can then answer how you will reach them to sell them your product as well as how likely you are to expand your market share. Another important consideration is how you plan to grow in the future and how you will handle that growth.

How Many Years Does a Business Plan Cover?

A business plan typically covers 3 to 5 years. This document is living, meaning you do have the ability to change it as your company's situation changes.

What Should Be Included in a Business Plan?

A business plan should include several important pieces including the Executive Summary, the Company Description, Market Analysis, Organization and Management, Service or Product Line and Marketing and Sales, to name a few. The U.S. Small Business Administration has an excellent tutorial to guide you through all of the parts of a business plan.

A business plan is essential to gaining funding, but even if you don't need funding, it can help you think through your business and develop a strategy for marketing as well as making money. By researching your market base as well as the competition, you can be more certain your business will likely be successful. You will start your business a few steps ahead of a competitor who may begin their business with no research or formal plan for growth.

If you already operate a small business, did you have a business plan first?