If you’re starting a business, you need a plan, even if you’re not pitching to investors or lenders. A business plan gives you direction, helps you qualify your ideas and clarifies the path you intend to take with your business.
There are four important reasons why you should write a business plan:
Business plans help you eliminate the gray area because you have to write specific information down in black and white. Making tough decisions is often one of the hardest and most useful parts of writing a business plan.
Writing a business plan is often the first real struggle after you decide you want to launch a new venture. This may be where you realize your business idea may be a bit flawed or is not yet fully developed. This may feel like a step back, but the work you do to improve your idea can bolster your chance of future success.
Discovering new ideas, different approaches and fresh perspectives are some of the best things that can happen from the depths of the business planning process.
When you use your business plan as a tool to help you outline action items, next steps and future activities, you are creating a living, breathing document. that The plan not only shows where you are and where you want to be, but also gives you the direction you need to get there.
These are the first steps. To finalize a more traditional business plan to provide to business partners, investors or banks, you can use this exercise to gather some of the most important information. Then follow this traditional business plan guide to expand your plan and add more detailed information.
1. Vision: Your vision statement sets the stage for everything you will do in your business from this point forward. This is where you can let yourself dream, pinpointing the visions that will keep you inspired and motivated, even when you hit a bump in the road.
2. Mission: A mission statement clarifies the purpose of your business and guides your plan, ultimately answering the question, "Why do you exist?"
3. Objectives: Your business objectives are the way you define your goals and priorities. What are you going to accomplish with your business, and by when? These objectives will drive the actions you take and help you stay focused.
4. Strategies: If your objectives are what you’re going to do, then your strategies are how you’re going to do it. Your goals come into play here, too, but instead of identifying where you want to end up, you're going to explain how you will get there.
5. Startup capital: You need to have a clear idea of what those startup expenses will be. so You can then figure out where the money is coming from and make sure you're spending what you have in the right areas.
6. Monthly expenses: What do you estimate your business’s ongoing monthly expenses will be immediately after launch? In three months? In six months? In one year?
7. Monthly income: In order to cover (and hopefully exceed) your expenses, you will need to estimate your income. What are your revenue streams? It's always wise to diversify your income so you are not tied to one stream that might not be as lucrative as quickly as you need it to be.
8. Goal-setting and creating an action plan: Once you have all of the other specifics outlined, it's time to break it down into step-by-step action items as explained in the companion guide, A Standard Business Plan Outline. This takes all of the hard work you've already done and breaks it down and applies it to reality.
A business plan doesn’t have to be a static document you create once and forget about. It can be a powerful tool you use consistently in your business to adjust your priorities, stay on track and keep your goals in sight.
Learn how U.S. Bank can support you and your business needs at usbank.com/small-business.