Probably the most important piece of advice you will receive before you start a small business is that you need to create a business plan. Unfortunately, most entrepreneurs ignore this at their own peril. A business plan serves many functions for a business. It is a required document if you want a business loan, and any investor is going to ask you to see your plan. But even if you aren't looking for outside money, it will be much harder for your business to succeed without a plan.
One of the most important functions of a business plan is to act like a road map. If you were going somewhere you've never been before, would you simply point your car in the general direction and hope to find the place? I suspect you wouldn't. So why would you simply jump in and start running a business without a plan? The results of the driving trip and the business would be about the same; you'll find yourself lost.
So, how do you get started? You don't need to follow a particular format or template for your business plan, but you may find it easier to do so. The Small Business Administration (SBA) has resources available at their website to help you, as do many other sites on the internet. If you are looking to get financing, you will definitely want to follow a template to help you develop a more formal plan. Otherwise, follow whatever format you think will make it easier for you to refer back to in the future.
Every plan should include some basic information about the business, including a description of what the business does and how you intend to grow and expand in the future. You should also include important financial information, including your projections about your expected costs and profits.
If you are looking for financing, you will also need to include some supporting documentation along with your plan. This will include items such as existing contracts, agreements or licenses the business has, as well as previous tax returns and a resume for each of the principles of the business.
While the plan will be very important for financing, and can help you a lot when you are first starting out, it will ultimately be much more important when your business does start to grow. If you've taken some time and really included the important information in your plan, you can now refer back to it to help you make important decisions on things like expansion or hiring.
Whatever path you choose to take in creating your plan, be sure you are not skipping or shortchanging this step. It has been said that if you fail to plan, you are actually planning to fail, and I believe this to be true. Give your business a chance to succeed and create a business plan.
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