When starting a business, a solid business plan can help you secure financing and win those crucial first customers. It can be your best asset, but a faulty business plan can create obstacles that could derail your new business before it has a chance to succeed.

Why is a business plan important?

A business plan is a living document that describes how your business is constructed. It is very important, especially for a new business, because it:

  • Helps you get a clear picture of each segment of your business.
  • Allows you to see opportunities and take advantage of them; or, perhaps more importantly, to spot possible pitfalls and avoid them.
  • Enables you to get expert opinions and make revisions, as needed, before applying for loans, hiring employees, choosing facilities, or making other major financial decisions.

What’s in a business plan?

A good business plan should focus on the following factors:

  • People—Who will be your employees, suppliers, or outside advisors? Who are your potential customers?
  • Opportunity—What are your products/services, and who will buy them?

How much can your business expect to grow? What obstacles do you face?

  • External Factors—What are the “macro” trends that can affect your business—such as the economy, regulations, and industry trends?
  • Risk—What are the potential pitfalls of your business plan, and how can they be overcome?

Creating a business plan, step by step.

When creating a business plan, there are many overlapping tasks to handle. So organize a schedule to get them done.

  • Step 1—Gather and review all the research and information on your target marketplace and industry.
  • Step 2—Ensure that you have up to date financial data on prices, estimates, and goals.
  • Step 3—Edit the business plan to make sure that the various sections of the plan are interconnected.
  • Step 4—Invite informed, experienced business experts to review your business plan.
  • Step 5—Make revisions, taking into consideration your expert reviewers’ recommendations.

With a clear vision for your business and this basic information about business plans, you’re ready to start writing. Read Get Started: 10 Steps to Writing a Business Plan to understand the common components of writing a business plan, and get started today!