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Why is planning necessary?

Written by: Joe Dager

Article Overview: Your business plan should be complete, clear, neat and accurate. It will be an extension of you and your business. The length of a good plan will vary from a few pages to well over a hundred pages. The plan should provide a sound "blueprint" for your business and entice any reader to want to know more

Why is planning necessary?

This information summary will provide you with an overview of planning and discus how and why to prepare a business plan. Why Planning Is Critical:

1. Planning gives you a path to follow. It makes your future what you want it to be.

2. It is the most important guide to starting, building and managing a successful business.

3. It is the best tool available to help a small business raise money.

4. A business plan can be a communications tool for investors, suppliers,

a. Employees and others interested in understanding

b. The operations and goals of your business.

c. If you don't plan for the success of your business -- you will fail. It is that simple!

Planning Can Be Difficult

Although planning is critical to your success, it is often overlooked in favor of intuition or "gut feeling." There are other obstacles that hinder planning, including:

1. Lack of know-how, it is sometimes difficult to know how to plan and what to plan for.

2. Fear of the unknown, it is hard enough dealing with the problems of today without worrying about what's going to happen in the future.

3. Inexactness, the best set plans have a funny way of not working out exactly the way they should.

These obstacles are very real. However, they must be overcome if you are to be successful. While we may find it difficult to face the future, heading into it without any direction is much worse.

The Business Plan

The business plan is a written document that clearly defines the goals of a business and outlines the methods for achieving them. A business plan describes what a business does, how it will be done, who has to do it, where it will be done, why it's being done and when it has to be completed.

Dreams and ambitions are great and important. But what really counts in the business world are results. Therefore, it is important to establish realistic goals with a sound methodology for achieving them. A business plan:

1. Is the management and financial "blueprint" for a business start-up and profitable operation.

2. Is written by the business owner with outside help as needed.

3. Explains how the business will function and depicts its operational characteristics.

4. Details how the business will be capitalized and managed.

Elements Of A Business Plan

1. Business Description

1. Business name, address and owner identification

2. Identifies goals and objectives. Clarifies why you are or why you want to be in business.

2. Products and Services

1. Very descriptive explanation of all products and services.

2. Describes what you are selling and why.

3. Sales and Marketing

1. Sales and marketing are the core of your business rationale. Your plan should address several basic questions.

2. Who and how large is your market? How will you be competitive? What pricing and sales terms are you planning? How will you market your products and services?

4. Operating Requirements

1. The plan should identify and describe the equipment, facilities and people necessary to generate your products and services.

2. How will your products and services be produced and made available to the customer?

5. Financial Management: This is the most critical part of your business plan. You will establish vital schedules that will guide the financial health of your business. If you are just starting a business, your plan should include:

1. Projected start-up costs.

2. Your expected profit or return on investment (ROI) for the first year.

3. Projected income state and balance sheet for two years.

4. Projected monthly cash flow statement for 12 months.

If you have a young or established business, your plan should include:

1. Income statement and balance sheet for the last two years.

2. Projected income statement and balance sheet for the next two years.

3. Projected monthly cash flow statement for 12 months.

Your plan should include an explanation of all projections. If you feel that your finance or accounting knowledge is not sufficient to prepare these statements, get professional assistance. The bottom line is: will, or does your company make a profit?

Concluding Narrative: This segment of your plan should summarize your business goals and objectives and send a message that your are committed to the success of your business.

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Article Tags: business plan



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Re: Is A Business Plan A Waste Of Time? - I feel that you don't really need one. I didn't write one down when I first started, but I have made various planning and decision-making spreadsheets along the way. I also think that a business plan is a HUGE waste of time IF you never take action. The step that most people fail on is failure to get started. Sitting around and planning won't ever get you anywhere. I would say implementation is more important than planning.
What Kind Of Internet Biz Do You Want To Have? - Hello and welcome to the forum! The advice we give really depends on what you are planning to do as well as your level of experience... Are you planning to take orders for products that you will stock, pack and ship yourself? If so, signing up with Paypal would be a good start. Or are you planning an affiliate site, where you take a commission on sales you generate without having to handle the goods yourself? Or a mixture of both? Are you planning to design your website yourself? Are you working within a fixed budget? (The good news is that some of the best methods of marketing a website are quite cheap or even free - if you are prepared to do the work required!) Good luck! David H.
Re: Is A Business Plan A Waste Of Time? - Business Plan or generally work plan (to do list) improves the quality of my work at least 4 times. I have seen the positive results of planning and focus in my online business. And I know from my past experience how uneficient your business can be when you are not doing planning. So I agree that there is a relationship between entrepreneur success and planning.
Re: Google Calendar - GT, My laptop is about 16 or 17 months old too, and it is OLD, I ma already planning on buying a new one. But I keep the planning in my head. My husband computer is 6 years old. I think we will replace it first.
Re: Plan Your Retirement NOW - [quote="Carol Aston":14cfqgaz]This is a great post Barbara and I can see you put a lot of thought into it, I have been planning my retirement for the last couple of years now [/quote:14cfqgaz] I wish I'd started planning when I was in my twenties... [i:14cfqgaz]that's [/i:14cfqgaz]when people should start planning for their retirement! But of course no one ever does...


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