Why a Business Plan is Important

Many young people starting a business usually do so as a gut feeling. It is good to be inspired but there is more to business than just happy feelings. You need a plan. This is where it also gets hard as many do not believe they need a business plan when they are so sure of themselves.

Recently someone asked me why they needed a business plan if they were getting all the funding they needed from friends and relatives. It sounded to me as if they were thinking of a business plan as just a fund-raising tool. In fact, a business plan is much more than that: It’s a tool for understanding how your business is put together. You can use it to monitor progress, hold yourself accountable and control the business’s fate. And of course, it’s a sales and recruiting tool for courting key employees or future investors.

Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan. You’ll end up spotting connections you otherwise would have missed. For example, if your marketing plan projects 10,000 customers by year two and your staffing plan provides for two salespeople, that forces you to ask: How can two salespeople generate 10,000 customers? The answer might lead you to conclude that forming partnerships, targeting distributors and concentrating on bulk sales to large companies would be your best tactics.

Sourced from: http://www.entrepreneur.com/article/74194

Before you start writing down your plan you need to know the rules. A business plan should be written with the audience in mind and it should be of moderate length. Be smart.

First, a few must-follow rules for writing a business plan

Keep it short.

Business plans should be short and concise. The reasoning for that is twofold: 1) You want your business plan to be read (and no one is going to read a 100-page business plan), and 2) your business plan should be accessible, something you continue to use and refine over time. An excessively long business plan is a huge hassle to deal with, and guarantees that your plan will be relegated to a desk drawer.


Know your audience.

Your plan should be written in a language that your audience will understand. For example, if your company is developing a complex scientific process, but your prospective investors aren’t scientists (and don’t understand all the detailed scientific terminology you want to use), you need to adapt. Accommodate your investors, and keep explanations of your product simple and direct, using terms that everyone can understand. You can always use the appendix of your plan to provide more specific details.

Sourced from: http://articles.bplans.com/how-to-write-a-business-plan/

When it comes to the content that is need in a business plan, it should be known that it is all about description and definition and these two should be made very clear. You will define the business, the market, marketing plan, management, organization among other things.

The Business

This section should briefly describe the purpose and goals of the business. Whether or not the business has started, explain who owns it. What was the trigger to launch the business?

If the business has already started, outline its history and performance to date. How high is the sales turnover? How profitable is it? What is its net worth? Provide summary figures here and detailed profit and loss account and balance sheets in the appendices. How does its performance compare with its competitors? How has the business been funded (e.g. equity, loans, grants)? What have been the major achievements to date?

Explain the legal structure of the business (company, sole trader or partnership). State if there are any distinguishing features, such as a unique feature of the product or service or approval to ISO9000.

Management and Organisation

It is important to demonstrate that you have the ability to carry out the tasks to make the business work. Focus only on the key points.


Describe the people involved highlighting the particular strengths and skills they bring to the business. This may include technical skills (such as joinery or sales experience), personal attitudes (such as enthusiasm or ability to work under pressure), education and specialist training. If you wish, provide curricula vitae for the key staff in the appendices. If there are apparent weaknesses, explain how these will be overcome (for example, by sub-contracting a particular aspect of the production process).


Describe the production process (if appropriate) and highlight any competitive advantages.


The reader is already aware of the logic behind your choice of premises; here describe the premises themselves, including details of any necessary licenses, health and safety requirements, planning permission, etc.

Sourced from: http://www.shell-livewire.org/business-library/business-plans/business-plan-contents/