Content area
Full text
ABSTRACT
The business plan is the product of a strategic thinking or planning process. The strategic direction developed in that process can then be communicated in the form of a business plan to lenders, potential investors and associates within your company. The development of a strategic direction is a critical step for your company. It allows your business to leverage the knowledge and competence of its management team, staff and advisors to develop a strategic direction for the organization that will lead to its best chance for success. This gives you an opportunity to use the advising team you have put together.
INTRODUCTION
Before starting your business, know where you are going. As the old saying goes, "there are a lot of people who have climbed the ladder of success only to find on reaching the top that it was leaning against the wrong tree." Know where you are going with your endeavor and know how you are going to get there! One of the best tools in accomplishing this is to have a very good business plan.
Keep in mind the purposes of a business plan. On the one hand, it is written to guide the business owner in how to develop and operate the business. A business plan becomes the plan of operating the business. On the other hand, it is written with the intention of attracting a lender or investor to finance the start-up or next phase of the business.
Lenders and investors want to understand their level of risk and what they will get in the way of returns on their investment. Be prepared to address all issues honestly and intelligently to best communicate to lenders/investors and yourself. Be up front about the risks and the strategies you are implementing to mitigate those risks. You should do this analysis and plan for your own benefit, even if you do not need a lender or investor.
The degree of planning will depend, in part, on the size of the enterprise. The time put into the plan will greatly impact your chance for success. There are four basic types of business planning: (1) strategy, (2) operations, (3) financial budgeting, and (4) forecasting. While large companies may have four separate plans, smaller...