Create a Business Plan
About Business Plans
A business plan is one of your most important documents, although it doesn’t have to be complex. The plan will help you set a vision and outline your strategy to make it happen. A thoughtfully written plan will become the foundation for your new business and a road map for measuring success. With your main goals clearly defined, it’s much easier to set targets, time lines and budgets.
Additionally, a business plan provides a tool that will help you establish credibility with lenders and potential investors. The most important result that should come from your plan is a clear understanding of how your business will work and the ability to articulate this quickly to someone else.
Here are a few points you'll want to cover in your plan.
Statement of Purpose
This is where you say why you’re going into business. In one or two sentences, write a clear and concise description of what you intend to accomplish with your new business.
Description of Business
In a brief but detailed statement explain to the reader whether your primary business will be in the service, retail, or manufacturing sector. A description of what is offered to the customer is a must.
Business Name & Legal Status
The name you choose will define your business identity. If your business will have a web presence, you’ll want to consider available URLs. You should also verify the availability of corporate names with your Secretary of State where you will be conducting business. Additionally, if you will be using a fictitious name, you will need to register it with the Cochise County Recorder’s Office. You will also need to decide the legal status of your company, sole proprietorship, general partnership, limited partnership, and corporation, S-corporation or Limited Liability Company. Each of these has different legal and tax ramifications so you may want to consult an attorney and/or your tax preparer ahead of time.
You will need to include within your plan, research on who will use your products and/or services and ask yourself the following questions.
- How will you reach and attract customers?
- How big is your potential market share?
- What is the growth potential?
- Are you dependent upon walk-in traffic?
- Will the bulk of your sales be cash or credit?
- Do you plan to offer lines of credit?
- Can you afford to write off bad debts?
- Who is your competition?
- How does your product/service/pricing compare to others?
One of the two primary causes of business failure is managerial weakness. Your financing source is aware of this fact so be honest, objective, and unemotional in the assessment of your own ability. Be sure to explain how you will overcome any management weakness. The personal history and work experience of all the business principals should be included in this section.
One of the leading causes of business failure is lack of financial preparedness. Set your company’s financial policy by considering how you will handle purchases, fixed and variable costs, cash, credit, creditors, and debtors. Explain how you will measure achievement of these policy goals. This process will enable you to realistically define how you will control your business. Ideally you should have sufficient funds to cover the first twelve months of operation, plus a cash reserve for emergencies. Sound budgeting, anchored by good bookkeeping and control over your cash flow, is the real test of financial management ability and the key to profitability.