Over the last year, Benjamin Jarmon, owner of business plan writing company Joorney Business Plans, has noticed an increase in the number of business plans they produce for female applicants and applicants to female-ran businesses.
While many business plans are created for foreign investors relocating to the U.S., the benefits of the document also apply to national investors and business owners in any industry. Business plans are an essential component to entrepreneurial success and are often a requirement of any loan applicant, investment search, or expansion plan.
What is a Business Plan?
A business plan is a statement of your business goals, why they are attainable, and how you plan to achieve them. Essentially, it is a roadmap for the success of your business. The document usually projects three to five years into the future and outlines the route that the company’s managers should take to grow revenues.
Generally speaking, a business plan has the following components:
- Executive summary: This is a one to three page summary of your business plan.
- Company profile: Relevant information about your company, such as your company’s name and address, vision, mission, business structure, and ownership.
- Market analysis: An analysis of the data collected from the market to determine the characteristics of the market.
- Organizational structure: The structure of your organization and management.
- Products and services: Description of your company’s products and/or services.
- Marketing and sales: Description of your plans and strategies for marketing and sales.
- Financial projections: Business startup costs, sales forecast, projections of income and expenses, cash flow, balance sheet and assets and liabilities, and break-even analysis.
- Appendix: Any other information you would like to include.
Why is a Business Plan Important?
A business plan is important for many reasons. Here are some of them:
1. It serves as a roadmap for the future of your business.
A business plan is a roadmap for the future of your business. It lets you see the big picture so that you will know exactly where your business is headed. It serves as a guideline for charting specific courses of actions to grow your business and to deal with emergencies.
2. It is essential for attracting investors.
If you are looking for investors for your business, then you will not make any headway without a business plan. Investors want to see a business plan that answers every question that may come to their mind before deciding whether to fork out their money or not.
3. You can’t get a loan without a business plan.
A business plan is essential if you are looking for a loan. Banks and other lenders want to see that you have a business plan and that it answers all of their important questions before deciding to approve your loan application.
4. It helps you manage cash flow.
A healthy cash flow is essential for the growth of a business. The reason many new businesses fail is not because they are not profitable but because they are unable to meet their debt payment deadlines. A well-structured business plan helps you avoid this problem by showing a clear picture of your funding requirements in advance.
5. It motivates the employees and improves collaboration.
Employees are motivated to perform better when they know the specific targets and goals they are required to achieve and the timeline for achieving them. When everyone knows clearly what his or her role is in the organization, collaboration between them improves.
In addition to the above, a business plan helps you make informed decisions when creating business alliances, dealing with professionals, hiring and firing of employees, renting office space, and dealing with displacement. Without a business plan, running a business will be like shooting an arrow in the dark. Thus, a business plan is the key to the success of your business.