Why is planning necessary?

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.