Kostecke CPA

The Basics of Business Plans – What You Need To Include and Why

Business Plans are Vital for a BusinessBusiness plans are documents that tell you and others how you are going to run your business. A plan contains the decisions you have made and why you have made them. It is a comprehensive document that addresses all critical aspects of your business.

Writing Comprehensive Business Plans

I have posted separately a list of questions pertaining to each section of a comprehensive business plan. These question sets are designed to give you a better idea of the things you need to consider when you put together your business plan. There are two sets of questions; one is geared toward new, startup businesses, and the other is for existing businesses.

There are two reasons for the number of questions on these lists. First, the questions listed, though numerous, should also prompt you to ask additional questions that are tailored to your business. You may feel the need to expand on a section of your business plan because of the nature or your business. This is good and will help you create a more detailed and relevant business plan. Second, by answering the questions in each section, you are forced to confront areas that you may not feel as comfortable planning. For example, you may not think you know much about marketing and want to skip that section. However, it is guaranteed that you will need to make decisions about marketing your business, whether it’s about where to set prices, whether or not to advertise in your kid’s yearbook, or the need to offer a discount to your customers. Try not to skip over any of the sections unless you’re absolutely sure they are not relevant to your situation.

You Know What They Say About Assumptions…

When you write your business plan, it should be based on information from a number of sources. You will need to do research on the competition, the market, costs, etc. Other parts of your business plan will be based on your own preferences and assumptions.

Assumptions can be unreliable, so you really should share your preliminary business plan, including sources of information and key assumptions, with other people. Having an independent person (or two), who you respect, review your business plan and your various assumptions and decisions is necessary. We all have the tendency to get stuck in details and not be able to see obvious things, both good and bad, in our own plans. Just make sure you can have a rational, adult conversation with the person. Don’t pick somebody who will completely kill your dream, or somebody who is too afraid to say anything the least bit negative. Instead, choose people who you can both accept criticism from but also disagree with, and not want to punch them in the face.

About Using Third Parties To Write Your Business Plan

You may not savor the opportunity to do research for your marketing plan. Or you may not know the first thing about income statements, balance sheets, and financial ratios. It is okay if you don’t – these are things that can be put together by highly skilled professionals who have access to resources that you may not have. There are people who put together business plans for people and they can certainly help you but you will probably have to pay for a really good one.

If you are highly motivated, have lots of time, and are short on cash, you can certainly do some of this yourself. However, when there is a lot of money at stake, it’s a good idea to at least have a professional who has experience with business plans take a look at yours and provide you with some recommendations.

What I do not recommend is that you have a business planning professional create the entire business plan for you, start to finish. The business plan should be a reflection of you and what you will do, and how you will carry out your responsibilities and duties as a business owner. If you have very little involvement in creating the business plan, you may not adopt it as your roadmap for running your business.  And if that happens, then all you have is a document you paid some money for that is useless. Plus, if this business plan was created to help you obtain financing and you do not follow it, you may fail to satisfy your lender or investor.

Next time, I will blog about how to  keep your business plan alive and use it as a tool for helping you reach your goals.

 
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