Business plans perform several functions. The business planning process can help ground your idea, clarify your business concept, and create a roadmap for implementing the idea. It can also help you to convey your idea to potential investors and lenders; determine the amount and type of financing you need to launch or expand the business and sustain it over time; determine the appropriate legal and organizational structure (for-profit, non-profit, cooperative); identify potential problems; and help manage your company.
Though business plans differ widely based on factors such as content and services, three primary components are consistent across business plans:
- Business concept: Discusses the industry, your business goals, business structure, your product or service, and how you plan to make your business a success.
- Marketplace analysis: Describes and analyzes potential customers, including who and where they are and what makes them buy. Marketplace analyses can also describe the competition and how the business will position itself to compete.
- Financial projections: Contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from an accountant or software program.
See Resources for the Entrepreneur below for additional information.